Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

COMMONS REGISTRATION (CARDIGANSHIRE) BILL

Read the Third time and passed.

KING'S COLLEGE LONDON BILL

As amended, considered; to be read the Third time.

GREATER LONDON COUNCIL (GENERAL POWERS) BILL

(By Order)

Order for consideration read.

To be considered upon Thursday next.

Oral Answers to Questions — SOCIAL SERVICES

Supplementary Benefit

Mr. Tim Renton: asked the Secretary of State for Social Services what percentage of claims for supplementary benefit come from families when at least one adult in the household is paying income tax.

The Minister for Social Security (Mr. Stanley Orme): I regret that this information is not available, but we estimate that less than 0·5 per cent. of claimants or their wives are paying income tax whilst receiving supplementary benefit.

Mr. Renton: Are not there a number or households where supplementary benefit is received regularly but where one or more regular dependants are at the sime time earning enough to pay tax? Does not this emphasise the overlap between the taxation and benefit systems and the need for a reappraisal of the whole untaxed supplementary benefit system?

Mr. Orme: Adults in households may include adult sons or daughters who are not dependent on the claimants and whose means are not investigated. There are also instances where a benefit—say, a housing benefit—takes the claimant above the tax level and, therefore, tax is then payable.

Mr. Moonman: On the related subject of the A.6 form used by my right hon. Friend's investigators, will he accept a further personal plea from hon. Members on both sides of the House who are deeply concerned about the use of this form in investigating the marital circumstances of people who may find their particulars on a computer, with the information being used for many years to come?

Mr. Orme: I understand my hon. Friend's feelings, and I answered a parliamentary Question of his on the subject only last week. I suggest that he and those of his hon. Friends who are concerned about this matter may care to discuss it with the chairman of the Supplementary Benefits Commission, Professor Donnison, and they may like to come to see me after they have discussed it with him.

Mr. Sproat: Is not there something desperately unjust about the interaction of wages, taxes and benefits when so many people can be better off by not working than by working? Does the right hon. Gentleman agree, for example, that it must be wrong that a postman can receive a net wage of £39·49 for a five-and-a-half day week starting at 5.30 in the morning when at the same time, apparently, another gentleman living on Dartmoor can get £132 a week in tax-free benefits for doing absolutely nothing?

Mr. Orme: The hon. Gentleman is once again misrepresenting and exaggerating the position. Only those with low incomes and large families—and they are very few in number—are likely to be better off. Fewer than 5 per cent. of men earn £45 a week or less, and many of them are young men without children. Fewer than 5 per cent. of those on benefit have four or more children, and many are one-parent families. It is the poor whom the hon. Member continually attacks.

South East Thames Regional Health Authority

Mr. Ovenden: asked the Secretary of State for Social Services when he next plans to meet the chairman of the South East Thames Regional Health Authority.

The Minister of State, Department of Health and Social Security (Mr. Roland Moyle): I expect to meet Sir John Donne at the next regular meeting with regional health authority chairmen on 16th May.

Mr. Ovenden: Does my hon. Friend agree that despite the small but welcome redistribution of funds to deprived areas in the region, too great a share of the region's resources are still being devoted to the London teaching hospitals? When he next meets the chairman of the regional authority, will he impress upon him the fact that the current plans for the region will still be under-funded by £24 million by 1987 and that we want to see a much greater degree of urgency towards redistribution and the application of RAWP principles in South-East Thames than we have seen so far?

Mr. Moyle: I am very grateful to my hon. Friend for his support of the RAWP formula. There is no particular need for me to press the case that he is urging on behalf of the chairman of the South East Thames Regional Authority because I know that he is fully desirous of ensuring that the under-funding in Kent is remedied. It is a difficult problem, because most resources in London are locked up in the teaching hospitals and we do need the output of the teaching hospitals to service the NHS of the future in all areas including Kent.

Mr. Peter Bottomley: Will the Minister discuss with the chairman of the South East Thames Regional Authority the danger of concentrating so many National Health Service beds in the large hospitals at the cost of closing down many small hospitals, such as the ones in my constituency? We have some very good small convalescent homes for patients on their way back from the district hospitals. Will the Minister reconsider the definition of acute beds, as convalescent beds are now called? Will he call them convalescent beds and keep them on?

Mr. Moyle: There is a very large surplus of beds in the Greenwich and

Bexley Area Health Authority, an authority which has had the addition of two new hospitals in recent years, which are very advanced in design, and it is inevitable that there will be some rationalisation of service.

Mr. Christopher Price: Before my hon. Friend meets the chaiman of the South East Thames Regional Health Authority, will he meet the chairman of the Lambeth, Lewisham and Southwark Area Health Authority, who will tell him that under the RAWP formula these three areas are due to lose 13 per cent. of the resources that they need? Many of us will welcome a cut-back in resources for the rich teaching hospitals—

Mr. Speaker: Order. That is not fair. Every area could get in on such a question. We are dealing with the South East Regional Thames Health Authority.

Mr. Price: But, Mr. Speaker, my area is part of the South East Thames Regional Health Authority. After that little geography lesson, I should say that many of us would welcome a cut-back in the over-provision for the teaching hospitals. Under these cuts it is not the teaching hospitals that are suffering but the facilities for the mentally ill and handicapped, which are gravely under-provided, particularly in the Lewisham area.

Mr. Moyle: I agree that there is considerable room for improvement in services for the mentally ill and handicapped in these areas. I assure my hon. Friend that I am in constant and regular touch with—

Hon. Members: We cannot hear.

Mr. Speaker: Order. It is customary to address the Chair when answering questions.

Mr. Moyle: I assure my hon. Friend that I am in close and regular contact with the chairman of the Lambeth, Lewisham and Southwark Area Health Authority.

Mr. Newton: Is the Minister aware that this concern about the way in which the RAWP exercise has proceeded is widely shared? However, out of deference to you, Mr. Speaker, I shall not mention any other areas. What steps is the Minister taking to monitor the way in which the allocation is being made and whether it is fair and consistent between one region and another?

Mr. Moyle: I am totally confident that the distribution between one region and another is based on the RAWP principles, and I support the allocation that has been made thereon. We continually monitor the RAWP formula and we have a special section in my Department to keep an eye on the matter continually. From the questions that I have heard today hon. Members are urging support for the application of the RAWP formula and are not expressing concern.

National Health Service (Industrial Relations)

Mr. Townsend: asked the Secretary of State for Social Services if he will make a statement on the progress made in improving industrial relations within the National Health Service.

Mr. Crouch: asked the Secretary of State for Social Services if he will make a statement on the progress he has made in improving industrial relations within the National Health Service.

Mr. Hodgson: asked the Secretary of State for Social Services if he will make a statement on the progress he has made in improving industrial relations within the National Health Service.

Mr. MacKay: asked the Secretary of State for Social Services if he will make a statement on the progress he has made in improving industrial relations within the National Health Service.

The Secretary of State for Social Services (Mr. David Ennals): Considerable progress has been made in implementing the recommendations contained in Lord McCarthy's report aimed at improving the NHS Whitley Council system. As further steps, I expect the General Whitley Council shortly to consider how to establish more effective industrial relations machinery at all levels of the NHS, and my Department is mounting the first of a series of intensive industrial rions training courses for selected . More generally, I recently  a meeting, which I believe to be the first of its kind, with leaders of the medical profession and the NHS trade unions. The meeting was fruitful, and I hope to follow it up with further joint discussions of issues relevant to industrial relations.

Mr. Townsend: Is it not a fact that the level of disruption caused by the action of ancillary staff in hospitals has reached disastrous proportions? Does this not show that there is something rotten in the whole state of the National Health Service?

Mr. Ennals: The hon. Member must get the matter into proportion. The NHS employs an enormous number of staff all over the country and in general industrial relations have been extremely good. When there are isolated outbreaks they do get widespread publicity. I have made it clear time and time again that I deprecate any industrial action—by doctors, nurses, porters, telephonists or anyone else—which endangers the care and health of patients.

Mr. Speaker: I shall call first those whose Questions are being answered.

Mr. Crouch: Does the Secretary of State accept that, like him, I am not fed up with the National Health Service? The Secretary of State knows that I work in it. However, does he agree that the industrial relations problem cannot be brushed under the carpet? Does he agree that the time has come for a more positive course in man and woman management to be introduced into the NHS?

Mr. Ennals: Certainly; there are such courses. In my answer I said that we were having intensive training courses in personnel matters. I must say that I wish that more of the hon. Members' colleagues would make statements like he has done, supporting the NHS. As for industrial relations, under Lord McCarthy's reforms the Whitley Council management sides have been made more effective and representative. Manpower and pay information units have been established within the Department. Also, the personnel function is being improved and developed.

Mr. Hodgson: Does the Secretary of State agree that the anxieties of patients and relatives have been greatly exacerbated by the activities of telephonists which are not directly concerned with the health of patients but are concerned with their psychological state? His statement today shows complacency, self-satisfaction and lack of urgency in getting to grips with the problem.

Mr. Ennals: The hon. Member's comments are absolutely ludicrous. There has been a great deal of exaggeration. The hon. Member for Reading, South (Dr. Vaughan) referred on 13th March to widespread industrial action in the NHS. This is not so. Hon. Members must keep this matter in proportion. When there is action by the telephonists it is right that we should speak out clearly, as I have done. But happily such action is being taken in only a few small parts of the country, and it is diminishing.

Mr. MacKay: Does the Secretary of State appreciate that the action taken by the telephonists and other ancillary workers is affecting the morale of patients and the medical profession? The patients' health is affected because of the action.

Mr. Ennals: I much resent the fact that everyone seems to be picking on one particular industrial dispute. I am very concerned about this. The telephonists have received a 10 per cent. pay increase but they say that they are dissatisfied with their pay and status. This is being properly considered by the Ancillary Staffs Council. To blow this up into a wider issue is unfair. Hon. Members should look at the whole breadth of the National Health Service, and the amount of time that is being lost in industrial action is very small indeed.

Mrs. Castle: Does my right hon. Friend agree that one of the best ways of improving industrial relations in the NHS is to introduce a system of common waiting lists for all patients in NHS hospitals in order to end queue-jumping by private patients who can afford to pay? Will he make a statement about the report of the Health Services Board asking him to phase out common waiting lists? He has had this report for several months.

Mr. Ennals: It is true that the Board has made recommendations to me, as it is obliged to do by legislation, on the establishment of common waiting lists. It is essential that we should have these to stop any sort of queue-jumping. I am consulting about this recommendation and at the right time I shall make a statement to the House.

Mr. Rooker: Is my right hon. Friend aware that since the day when the NHS was reorganised by the Conservative

Party in 1974, the ambulance service in the West Midlands has not worked properly in the interests of the people there? What will he do about it?

Mr. Ennals: I would be grateful if my hon. Friend would table a specific Question about that matter.

Dr. Vaughan: Does the Minister realise that instead of making remarks about being cheesed off by militants we would like to see some much more positive action? Out of these discussions with the BMA and the TUC, will he produce a code of behaviour for people working in the National Health Service?

Mr. Ennals: Frankly, I am a bit cheesed off with the hon. Gentleman. It was he who, in the House on 13th March, referred to widespread industrial action when we had no such thing at all in the National Health Service. This sort of exaggeration is trouble-making.
The meeting that has been held between leaders of the National Health Service unions and the BMA was a cordial one. One of the ideas that I raised at the meeting, which received a good reception, and which will be discussed at our next meeting, is precisely the proposal for some sort of code of practice to improve industrial relations within the NHS.

Mr. Litterick: Does the Secretary of State agree that a basic cause of demoralisation amongst NHS staff is the deliberate reduction of real wages through the operation of wages policy and by the severe cuts in capital spending in the NHS, which has prevented these conscientious people doing the best possible job by their clients?

Mr. Ennals: First, I very much respect the way in which workers within the NHS have been prepared to settle this round of pay negotiations within the Government pay guidelines. I think that we owe them thanks for that.
Secondly, I do not believe that there is deep demoralisation within the NHS. It is to say that those working in the Health rvice recognise that they could do a better job with more resources. That I do not doubt.

Means-tested Benefits

Sir George Young: asked the Secretary of State for Social Services whether


it is his policy to increase dependence upon means-tested benefits.

Mr. Orme: No, Sir. Our aim is to reduce dependence on means-tested benefits and measures that we have introduced, such as the child benefit and new pensions schemes, are steps in this direction. Meanwhile, means-tested benefits are giving essential protection to poorer people.

Sir G. Young: If it is the Government's policy to reduce dependence on means-tested benefits, why are there now three times as many people on rate rebates as there were in 1973?

Mr. Orme: The answer to that is that the Government have made the public aware of these benefits and have encouraged people to claim them.

Mr. Heffer: In view of the fact that many thousands of people are entitled to benefits but are not taking them up, and are therefore suffering unnecessarily as a result, does my right hon. Friend agree that it would be a good idea if the form of market concept that has been developed in his own area—a shop to which people could go to find out what benefits they were entitled to—should be developed, particularly in areas where there are too many people, unfortunately, who have to depend upon the type of benefits available?

Mr. Orme: I agree with my hon. Friend. As he will see from the annual report of the Supplementary Benefits Commission, Professor Donnison and the Commission estimate that between £250 million and £300 million in legitimate benefits are not claimed by people who could claim them. I am also very much aware that voluntary organisations throughout the country do a great deal of work to draw to people's attention their rights to benefits. In the summer the Supplementary Benefits Commission will launch a campaign on this issue.

Mr. Wigley: Is the Secretary of State aware of the disappointment and dismay amongst many beneficiaries of social security and other benefits, including single-parent families, who looked forward to the child benefit only to find that it was taken away from the other benefits that they received? Does he realise that this group of people are the people

who most need the increase in child benefit, and cannot he get it changed, to look after them?

Mr. Orme: This is a problem of overlapping benefits and the difficulty of paying the same benefit twice to the same people. As we phase in child benefit and increase child benefit, this will become less obvious.

Voluntary Organisations

Sir T. Kitson: asked the Secretary of State for Social Services what further steps he is taking to encourage the work of voluntary bodies in relation to social services.

Sir Bernard Braine: asked the Secretary of State for Social Services what further steps he is taking to encourage the work of voluntary organisations in social services.

Mr. Ennals: I have constantly stressed the importance of collaboration with voluntary organisations and the harnessing of community effort, through such means as the good neighbour campaign. I have also invited local and health authorities to consider what other assistance they can offer to voluntary bodies in addition to financial support such as further rate relief, provision of accommodation, transport or services, free or at cost.
I have raised the amount available for grants to voluntary bodies in 1978–79, under Section 64 of the Health Services and Public Health Act 1968, to £5·384 million, an increase in real terms of more than 54 per cent. over the comparable amount for 1973–74, the last year of the previous Government.

Sir T. Kitson: In view of the recent report on the death of Simon Peacock, which is similar to other deaths and cases of battered babies, does the right hon. Gentleman agree that there is a need to help overworked social workers and for greater co-operation between voluntary organisations to minimise similar cases arising?

Mr. Ennals: There is no doubt that the contribution of some voluntary organisations, in particular the NSPCC, is extremely important in child care. I absolutely agree with the hon. Gentleman that more can be done not only by voluntary organisations but by individuals, first, to


give some assistance, friendship and support to families who have problems and burdens and also, when they are concerned, to make sure that a doctor or social worker is aware of their concern.

Mr. Arnold Shaw: Is my right hon. Friend aware that very much depends on the attitudes of local authorities in this matter? Is he aware, too, of the niggardly regard which is paid to this matter by certain local authorities, among which I include my own?

Mr. Ennals: It is true—I deeply regret it—that in the restraints that have been applied on public expenditure some local authorities have sought to reduce the assistance given to voluntary organisations. This is a very unwise form of economy. Not only have I encouraged them to continue to give support to voluntary organisations but, through the joint financing between health authorities and local authorities, I have ensured that voluntary organisations can receive the benefit of joint financing.

Mrs. Chalker: Will the Secretary of State tell the House what discussions he has had with the Chancellor of the Exchequer to stimulate voluntary giving in order that many of these voluntary societies can help themselves?

Mr. Ennals: This is not a good moment at which to reveal any discussions that I have had with the Chancellor of the Exchequer, who will appear on the scene fairly soon. However, I may tell the hon. Lady that I have been giving additional support to the voluntary organisations in a variety of ways, such as grants to help them with training for the certificate of qualification in social work, the purchase of short-life leasehold property for use as shelters, day centres, and so on, and for funding partnership schemes under which, with the agreement of the local authority concerned, a selected voluntary organisation may be asked to undertake a particular project for a limited period of time.

Several Hon. Members: rose—

Mr. Speaker: Order. I hope that the hon. Member for Essex, South-East (Sir B. Braine) will wait a moment. I made a mistake in not calling him earlier, as he realises.

Mr. Carter-Jones: Does my right hon. Friend agree that though this statement is helpful he ought to have words with professional organisations to allow individuals and voluntary organisations to give help in the social services? Whenever he gives financial help, will he make sure that the House and the public generally know how much he gave, and for what purpose?

Mr. Ennals: If the hon. Gentleman will table a Question on the last point I shall do so, to indicate the range of grants that my Department has given during the course of the past year to voluntary organisations.
On the first part of the hon. Gentleman's question, of course it is important to encourage not only organisations but individuals to help. This is very much the purpose of the good neighbour campaign that is now being run largely by a co-operative of about 40 national voluntary organisations.

Sir B. Braine: Since the right hon. Gentleman clearly believes that there is a role for voluntary social service to supplement our hard-pressed statutory services, does he accept the gloomy conclusion of the Wolfenden Report that in future voluntary effort can be sustained only by public financing, or will he urge the Chancellor of the Exchequer to begin positively encouraging private and corporate giving, as is done in the United States and other countries?

Mr. Ennals: I think that the voluntary organisation movement is in a very healthy situation. It has come through a difficult financial stage very well. Owing to some of the problems of inflation that face them, I, as Secretary of State, increased the amount of money made available to national organisations.
As for the Wolfenden Report, we are consulting on that excellent document and I will be making a further statement when we have considered some of the proposals contained in it.

Private Medical Sector

Mr. Budgen: asked the Secretary of State for Social Services whether he will encourage the expansion of the private medical sector outside the National Health Service.

Mr. Michael Morris: asked the Secretary of State for Social Services whether he will encourage the expansion of the private medical sector outside the National Health Service.

Mr. Roland Moyle: No, Sir.

Mr. Budgen: Is the Minister aware that in September last year there were about 6,000 qualified nurses registered unemployed and that of that number about 250 were in the West Midlands? Does he agree that an expansion of private sector medicine would rescue some of those nurses from the misery and humiliation of not having a job?

Mr. Moyle: There are many reasons for the non-employment of nurses in the NHS, but as a matter of fact the number of nurses employed in the Health Service increased from 163,000 in 1974 to nearly 176,000 in 1976, and the number has increased substantially since then.

Mr. Michael Morris: As the trade union movement has its own private hospital in North London, would it now not be politically more honest and economically more sensible to encourage a mixed economy in health care?

Mr. Moyle: No, Sir. The Department, my right hon. Friend and I are committed to a National Health Service free at the point of use—and a public health service at that.

Mr. Pavitt: Does my hon. Friend recall that in recent answers to me he pointed out that there is an acute shortage of operating theatre nurses? In view of the fact that the private sector is not interested in such subjects as geriatric care and mental health but is concerned only with dramatic operations, will he now add to the criteria of the Health Services Board in permitting new private hospitals to be built?

Mr. Moyle: The Health Services Board, under the Health Services Act 1976, subsequently consolidated, has the duty of deciding on these matters.

Hon. Member: Turn round. We cannot hear.

Mr. Speaker: Order. It is ineffective to turn one's back on one half of the House because the House does not hear what is being said.

Mr. Cyril Smith: Is the Minister aware that there is also an acute shortage of nurses in child nursing, especially at hospitals such as Booth Hall, Manchester? If he accepts that this is the position, does he agree that it will be better to retrain some of the nurses who are now unemployed, so that they may undertake child nursing within the National Health Service rather than to encourage the private sector of nursing?

Mr. Moyle: I do not accept that there is a national shortage of nurses who are prepared to undertake child nursing. There may be local shortages in various parts of the country. If retraining is to take place, it must be done voluntarily on the part of the nurses concerned. But I am sure that local area health authorities will do their best to meet any local shortages.

Mr. Blenkinsop: Does my hon. Friend agree that any expansion of the private service almost inevitably leads to some restriction on NHS facilities? Is that not what the Opposition have always wanted?

Mr. Moyle: I hope that when the General Election takes place the electorate will take note of the fact that the Opposition are seeking to increase the private health sector at the expense of the public health sector. Therefore, my hon. Friend's point is valid. The Health Services Board must take this matter into account, including private development.

Mr. Boscawen: Has not the tragic waste of medical resources, shown by the fact that there are unemployed nurses and lengthening queues, shown that the philosophy of phasing out hospital pay beds and not encouraging the private sector has been hopelessly ill-timed, has encouraged queue-jumping within the NHS, and has been politically motivated?

Mr. Moyle: That supplementary question is founded on a large number of misconceptions. Most of the pay beds that have been phased out of the NHS up to now have been unused or underused.

Pensioners (Benefits)

Mr. Arnold: asked the Secretary of State for Social Services what is his latest estimate of the number of retirement


pensioners entitled to receive supplementary benefit who do not apply for such benefits.

The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins): At the end of 1975, about 600,000 retirement pensioners were estimated not to be receiving supplementary benefit to which they were entitled.

Mr. Arnold: Will the Minister pay attention to the complexity of many benefits and the great difficulty that many people face in discovering to what benefits they are entitled?

Mr. Deakins: This is a problem of which we and the Supplementary Benefits Commission are fully aware and we are concerned about the situation. I draw the hon. Gentleman's attention to chapter 10 of the last annual report of the Commission, which goes into this issue in some detail.

Mr. Park: In view of the large amount of unclaimed benefit about which we heard earlier, could not the Department deal more sympathetically with retrospective claims from people who learn about their benefit to entitlement too late?

Mr. Deakins: We do what we can within the limits of the discretion allowed by laws laid down by this Parliament to exercise discretion over the retrospective payment of benefits not only for supplementary pensioners but for other recipients of social security benefits who have not claimed them in time. There are reasons which have to be given for not claiming in due time, and also laws laid down by this House to ensure that benefits cannot be claimed more than a certain period in arrears.

Mrs. Chalker: This afternoon the Minister rightly referred, with praise, to Professor Donnison. Will he explain to the House why the Labour Government refuse to research a tax credit system to help those pensioners who should be receiving benefit but who today do not claim supplementary benefit?

Mr. Deakins: The idea of a tax credit system would not help in this connection. The pensioners who are not claiming supplementary benefit by and large are failing to do so not because of ignorance but partly because in some areas they think there is a stigma attached to claiming

benefit, and partly because in many instances the amounts to which they would be entitled would be less than £1 a week.

Mr. Ashley: In view of the fact that the Minister a moment ago said that over £300 million in benefits of all kinds are unclaimed, does this not make nonsense of the anti-scrounger campaign so assiduously peddled by Conservative Members? When the Secretary of State launches his campaign to increase the uptake of benefits, will he also make clear that the anti-scrounger campaign is damaging to genuine recipients and people in need?

Mr. Deakins: My hon. Friend makes a most important point. I am certain that the anti-scrounger campaign has had an impact in preventing people who would otherwise have come forward from taking up their entitlement. It ill behoves those who believe that there are vast amounts of unclaimed benefits to attack those who are abusing the system. For pensioners, the total amount that we estimate to be unclaimed is £65 million. There are many other possible recipients of supplementary benefit who are also not claiming.

Boarding-out Allowances

Mr. Andrew F. Bennett: asked the Secretary of State for Social Services if he will make a statement about his discussion with the local authority associations about boarding-out allowances.

Mr. Moyle: The local authority associations have begun work on the preparation of recommendations concerning age bands, age relativities and the assimilation of discretionary additions. As part of their general review of these matters they will take into account the scales published in my reply to my hon. Friend's Question on 14th February. They have, however, made it clear that guidelines which called for additional expenditure could not be introduced without a comparable increase in resources.

Mr. Bennett: I thank the Minister for that answer. I hope that he will agree that the tables published in the Official Report in February showed a wide discrepancy between one local authority and another in the levels of boarding-out allowances. Will he now introduce a minimum scale for all local authorities, so


that we may bring up those authorities who pay such abysmally low scales?

Mr. Moyle: There were wide variations in my original answer. Some variation is to be expected, because the level of boarding-out scales is influenced by regional and local factors, including the availability of foster parents and the possible need to provide an incentive to fostering. The local authority associations are hoping to be able to review these wide variations in time for the 1979–80 rate support grant settlement.

Mr. Hodgson: Will the Minister widen his answer to cover foster parents generally? Is he aware that inequalities exist across all regions in all services connected with fostering? By what steps, and when, will those inequalities be ironed out?

Mr. Moyle: The local authorities hope to be able to make recommendations in time for the application of the 1979–80 rate support grant. Individual local authorities will be free to accept or reject those recommendations. We hope that as a result of consultations there will be a move towards greater uniformity.

Disability Allowance

Mr. Whitehead: asked the Secretary of State for Social Services if he is satisfied with the criteria used by his department in assessing the take-up of the disability allowance.

The Under-Secretary of State for Health and Social Security (Mr. Alfred Morris): There are a great many allowances for disabled people, and the criteria vary according to the purposes of each allowance. As to the take-up of the allowances, this is frequently reviewed and I am anxious to do all I can to ensure that every possible beneficiary receives all the allowances to which he or she is entitled. I am grateful for the help that I have received from hon. and right hon. Members in improving the take-up of allowances for disabled people, and will much appreciate any further help that they are able to give.

Mr. Whitehead: Will my hon. Friend consider particularly the position of blind people, who, at least in my area, have been turned down for most of the newer allowances, including the mobility allowance and the non-contributory invalidity pension, sometimes after only slapdash

consideration? Would not a widening of the criteria for disability generally be of particular help to the blind?

Mr. Morris: Organisations representing blind people have made representations to the Prime Minister and I cannot anticipate his reply, but very careful consideration has been given to the claims of blind people. We do not underestimate their mobility problems, and they are included, for example, in the orange badge scheme. My right hon. Friend and I will bear in mind everything that my hon. Friend has said.

Mr. Dykes: Will the Minister at long last do something about the application forms for invalidity pensions, because they are very complicated, discriminate directly against women, and ask many unnecessary questions?

Mr. Morris: We are reviewing the application forms. We shall do so in consultation with the Disablement Income Group and the Disability Alliance. What the hon. Gentleman has said has been endorsed by other people and I shall have it fully in mind in the review.

Mr. Clemitson: Whatever the criteria, is my hon. Friend satisfied that they are being applied consistently and fairly?

Mr. Morris: That is an important point. We need rules in order to be consistent and equitable. We are trying in this area to meet infinite claims with finite resources. There are other groups, apart from those that have been mentioned, which are under consideration for help.

Mr. Newton: Does the Minister agree that among all the worries of the criteria for these allowances, one of the worst is that which is denying many kidney machine patients the attendance allowance? What progress has been made towards an appeal on this matter, and when does the Minister expect to be able to tell us more?

Mr. Morris: We are awaiting an application for leave to appeal to the National Insurance Commissioner on a question of law. A constituent of one of my hon. Friends is considering such an application. As I have explained before, we must not put the cart before the horse and it would be inappropriate for the Government to consider changing the law until we have the Commissioner's decision


about whether the Board's interpretation of the law is correct.

Supplementary Benefits Commission

Mr. Knox: asked the Secretary of State for Social Services whether he is satisfied with the work of the Supplementary Benefits Commission.

Mr. Orme: Yes, Sir. The Commission discharges its responsibilities in an informed and sensitive way.

Mr. Knox: Is the Minister satisfied that the Commission is able to deal with the increased work load since 1974 which has been caused by the big increase in the number of poor people needing benefits since the Government came to power?

Mr. Orme: The hon. Gentleman's last point is not correct. The work load of the Commission has increased because the Government have introduced new benefits for people who need them. The Commission is examining, through the supplementary benefits review, whether it can bring forward proposals to improve the situation.

Mr. Robert Hughes: Is it not often an arbitrary choice whether people apply for supplementary benefit or for rent and rate rebates from local authorities? Is it not iniquitous that, having applied for a local authority benefit, people remove themselves from the possibility of benefiting from the electricity discount scheme? What can the Commission do about that?

Mr. Orme: The Commission is looking at this point. My hon. Friend will realise that there is a problem of overlapping benefits and people getting supplementary benefits and rent or rate rebates. We understand that this problem is created by the poverty trap. We want to remove the poverty trap, and the Commission is examining this matter.

BURGESS HILL

Mr. Tim Renton: asked the Prime Minister whether he will visit Burgess Hill, in West Sussex.

The Prime Minister: I have at present no plans to visit Burgess Hill.

Mr. Renton: Is the Prime Minister aware that in Burgess Hill I would willingly introduce him to a number of successful small firms which are not increasing their work force because the mass of employment legislation passed by this Socialist Government is crushingly weighted against them as employers? Does he realise that the incentive for these small firms is to invest in machinery and not in more men and that the unemployment problem is thus being compounded?

The Prime Minister: No, that is not my experience of small firms. Reliefs that were given last autumn and subsequently are helping small firms considerably and I find great appreciation for that fact.

Mr. Madden: Has my right hon. Friend noticed the courageous opposition of the hon. Member for Worthing (Mr. Higgins) and the right hon. Member for Sidcup (Mr. Heath) to the Conservative Party's proposals on immigration which seem to be based—

Mr. Speaker: Order. This is not the open form of Question. The hon. Gentleman's supplementary question is not linked at all with the main Question. Mr. William Molloy.

Mr. Molloy: Question No. 2, Sir.

Mr. Madden: On a point of order, Mr. Speaker.

Mr. Speaker: Will the hon. Gentleman wait until after Question Time?

Mr. Heffer: No.

Mr. Speaker: I do not require any help from the hon. Member for Liverpool, Walton (Mr. Heffer).

Mr. Heffer: rose—

Mr. Speaker: Order. We are taking Prime Minister's Question Time. I suggest that points of order should wait until afterwards.

TUC AND CBI

Mr. Molloy: asked the Prime Minister when he next proposes to meet the TUC and CBI.

The Prime Minister: I met representatives of both the TUC and the CBI


when I took the chair at a meeting of the NEDC on 1st February. Further meetings will be arranged as necessary.

Mr. Molloy: When my right hon. Friend next meets the TUC and the CBI, will he draw to their attention the "phoney" display of concern on unemployment adopted by the Opposition? This was revealed last night in their speeches and votes on British Leyland and the National Enterprise Board, two undertakings which were designed to assist the economy of our country and to prevent unemployment and have been successful in doing so. Yet the Tory Opposition are continually opposing them.

The Prime Minister: I think that we all thought that it was a rather odd display by the Opposition last night, especially as they did not seem to know whether they wanted a vote or not on the first motion. It is in accordance with their usual practice: they are opposed to all grants and subsidies. That is well recognised and there is no doubt that British Leyland would suffer substantially unless it were able to pursue the path that it has begun of improving its performance very substantially.

Mr. Pardoe: Did the Prime Minister discuss with the TUC at the last meeting the need for a new phase of incomes policy, and did he tell the TUC leaders that he still believes that earnings must not rise by more than 5 per cent. during the next phase, and what was their reaction?

The Prime Minister: I shall handle this matter with the usual skill and care which has resulted in substantial progress during the current round. The major element which every trade unionist, his wife and family understands is that prices should not be allowed to rise. We are doing quite well this year in the sense that we have got inflation running at 9 per cent. and it will come even lower. It will be helpful to all trade unionists and their wives if prices do not go up or inflation does not increase beyond that next year and it would be preferable for it to be reduced so that we can be more competitive. That will be my aim, and it will be the basis on which discussions will be conducted with the trade unions.

Mr. Ron Thomas: When my right hon. Friend meets the TUC, will he discuss the dangerous and continuing import penetration of finished and semi-finished manufactured goods, the value of which reached almost £19,000 million last year? As it looks as if other industrial countries are not willing to take my right hon. Friend's advice to expand their economies, is there not a real need for selective import controls?

The Prime Minister: My hon. Friend does not focus on the fact that there are already selective import controls and that each case must be decided on its merits as it is presented to us. Basically, however, it is far better that the world should have an expansion of trade than that we should all be cocooned inside our own economies. That is the path that I should prefer to tread.

PRESIDENT CARTER

Mr. Tebbit: asked the Prime Minister what matters he discussed with the President of the United States of America during his recent visit.

The Prime Minister: Our talks were mainly on economic issues as part of the preparation for the seven nation Summit due to be held in Bonn on 16th and 17th July. President Carter and I were agreed on the importance of co-ordinated international action to reduce unemployment, stimulate world trade, assist long-term capital flows especially to the developing countries, introduce greater order into the exchange markets and on the need for the American Administration's energy programme to be made effective.
The President and I also held discussions on the situation in the Middle East, and the future of relations with the Soviet Union, including the current position of the talks to limit strategic arms and other weapons.

Mr. Tebbit: Does the right hon. Gentleman recollect that before he went to America he seemed to express in the House a robust attitude towards the possible deployment of enhanced new radiation weapons in Europe? Since then the President has frozen development of such weapons and rather cut the ground from under the Prime Minister's feet. Does the right hon. Gentleman still favour the


deployment of these weapons in the event that the United States goes ahead with their development?

The Prime Minister: The President and I discussed the matter fully, especially in the light of the disarmament conference that is coming. I do not detract for one moment from the views that I expressed in the House before, namely, that there are weapons that have been deployed on the Soviet side that are far more dangerous than the enhanced radiation weapon. However, this is a political matter for the President alone to decide, as was always the case. It is for him to decide whether this will assist the disarmament negotiations, and I see no reason to differ from him on that matter. Indeed, we discussed it on that basis. It is important that we should attempt to secure disarmament in this sphere and not to pile up armaments. That is the whole purpose of the strategic arms limitation talks.

Miss Joan Lestor: Will my right hon. Friend say whether he had the chance to raise with President Carter the interesting speech of my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, in which he questioned the continued economic wisdom of further investment in South Africa? If my right hon. Friend has not been able to raise it with him, will he do so at the earliest possible moment?

The Prime Minister: Discussions go on about these matters, but I did not discuss the issue particularly with President Carter. It is a growing risk to invest in South Africa, in view of the developing political situation there.

Sir J. Eden: In view of the brutally cynical encouragement given by Russia and Cuba to insurrectionist elements in Africa, what attempts did the right hon. Gentleman make to persuade President Carter to back those who are trying to achieve a peaceful solution to the problems of Rhodesia through the medium of the internal settlement?

The Prime Minister: The internal settlement, in so far as it accords with the Anglo-American plan, is something that should be supported. However, without the Anglo-American plan there is little prospect that the internal settlement will succeed. That is because there are

substantial elements outside Rhodesia that are not reconciled to it.

Mr. Wrigglesworth: I welcome the announcement of the Bonn Summit, but does my right hon. Friend agree that there are fears that such a Summit might raise the expectations of people too high, as has been the case on a couple of previous occasions? Therefore, will he tell us what grounds there are for hoping that more success in getting the world economy going again may be achieved this time? Will he consider inviting OPEC country representatives along to the Summit, as the £40 billion that the OPEC countries have is the major cause of our problems in the West?

The Prime Minister: The case for hoping that there will be improvement is that all the Heads of Government gave their support to the statement that was issued yesterday, and to which I referred in my report to the House, on the meeting of the European Council, namely, that there is acceptance that a co-ordinated effort is needed if we are to restore confidence in the Western industrial world. At this stage it would not be advantageous to include the OPEC countries in the discussions.

CHANCELLOR SCHMIDT

Mr. Gwilym Roberts: asked the Prime Minister when he plans to have a further meeting with the West German Chancellor.

The Prime Minister: I have been in touch with Chancellor Schmidt about dates for the next in the series of our regular bilateral meetings, and an announcement will be made shortly.

Mr. Roberts: When my right hon. Friend meets the West German Chancellor will he reopen with him the question of the offset agreement for British troops in Germany? Will he put it to him that many people in Britain are angry that a wealthy country such as Germany is prepared to pay only about 6 per cent. of our annual £600 million bill?

The Prime Minister: No, I shall not reopen this matter. The agreement, which was signed in Bonn on 18th October 1977, made it clear that it was the final


settlement that would be made. We now operate under our treaty obligations.

Mr. Geoffrey Finsberg: When the Prime Minister meets the West German Chancellor will he take an opportunity of discussing with him the problems that the West German Government have had, as have other NATO allies, of grave breaches of security? The latest breach in West Germany may well have imperilled all of NATO's strategic planning.

The Prime Minister: The problems of security between our countries are discussed from time to time. However, I am in no doubt that Chancellor Schmidt takes this issue as seriously as do I and the hon. Gentleman. I think that there is no need for me to remind him about it.

Mr. John Mendelson: In discussions with the Chancellor of the Federal Republic, will my right hon. Friend take the message with him that his decision to agree with President Carter on not proceeding with the preparation of the neutron bomb will receive widespread support in this country, despite some opinions that have been expressed, and shows the wisdom and statesmanship of the President of the United States? Will he note that those who supported him when he made his statement a fortnight ago about the Soviet weapon now hope that the Soviet Government will make an appropriate response?

The Prime Minister: It is important that the Soviet Government should take note of the deep feeling in the Western world about the enhancement of its own weapons and their capacity for improvement, which has been very substantial. If we are to have a successful disarmament conference in New York at the end of May, it will be for the Soviet Government to respond to what the President has done.

Mr. MacFarquhar: In view of some of the remarks that my right hon. Friend made yesterday when reporting on the European Summit, will he say whether Chancellor Schmidt will regard today's Budget, to be introduced by my right hon. Friend the Chancellor of the Exchequer, as the opening salvo in a concerted European campaign against unemployment and in favour of growth?

The Prime Minister: I think that we had better wait and hear the Budget before we decide what we think about it, let alone Chancellor Schmidt.

Mr. Mayhew: When the right hon. Gentleman meets Chancellor Schmidt will he discuss with him whether it would be possible even to maintain our present support for NATO if the £1,000 million cuts in defence expenditure proposed by his party's published and adopted policy were given effect?

The Prime Minister: I do not think that it would be possible to maintain our posture if we were to cut defence expenditure by £1,000 million. That is why the Government do not intend to agree to it.

Mr. John Evans: Will my right hon. Friend make it clear to Chancellor Schmidt when next he meets him that the greatest threat to the Common Market is massive unemployment? Will he point out to him that it is essential that West Germany takes the lead in inflating the economies of the Common Market, otherwise, some countries, including Britain, may be forced to take protective measures, including, if necessary, import controls?

The Prime Minister: I dealt with these questions at some length yesterday, when I made my report. It is clear that the Federal Republic is as concerned as any other country to secure growth. The difference at the moment, if there is a difference, is how that growth can best be achieved.

QUESTIONS TO THE PRIME MINISTER

Mr. Madden: On a point of order, Mr. Speaker. You have often pointed out that we have discussed the difficulties in which Back-Bench Members are placed because of the limited nature of Questions put to the Prime Minister. In seeking to put the question that I put, I had two objectives: one, to draw attention to the—[Interruption.]

Mr. Speaker: Order.

Mr. Madden: —to draw attention to the courageous speech made by the hon. Member for Worthing (Mr. Higgins)—[Interruption.]

Mr. Speaker: Order. Let me hear the point of order.

Mr. Madden: —to draw attention to the courageous speech made by the hon. Member for Worthing against the Conservative Party's immigration proposals, and, secondly, to ask the Prime Minister—

Mr. Speaker: Order. It seems as though the hon. Gentleman is merely going to ask the question that he had suggested earlier. If there is a point of order on which he wants me to rule, I shall gladly try to do so, but he cannot ask his question now.

Mr. Madden: I am grateful for your tolerance, Mr. Speaker, which is most characteristic. I am trying to highlight the difficulty in which I and many other Back Benchers find ourselves. I was seeking to ask the Prime Minister whether he had yet received a proper apology from the right hon. Member for Penrith and The Border (Mr. Whitelaw) for the accusation that that right hon. Gentleman made against him.

Mr. Speaker: Order.

STATUTORY INSTRUMENTS, &c.

Mr. Speaker: By leave of the House, I shall put together the Questions on the three motions relating to Statutory Instruments.
The Question is that Commission Document—

Mr. Andrew F. Bennett: On a point of order, Mr. Speaker.

Mr. Speaker: Order. Shall I finish reading this?

Mr. Bennett: The point of order is on this matter. May I request that you put the motions separately, since many Labour Members wish that motions Nos. 2 and 3 be debated fully on the Floor of the House because they object to the phasing out of imperial measures?

Mr. Speaker: I shall gladly put them separately.

Ordered,
That Commission Document No. R/1927/77 relating to Animal Feedingstuffs be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Foot.]

Motion made, and Question put,
That the draft Weights and Measures Act 1963 (Potatoes) Order 1978 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Foot.]

Not less than 20 Members having risen in their places and signified their objection thereto, Mr. SPEAKER declared that the Noes had it, pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &amp;c.).

Motion made, and Question put,
That the draft Weights and Measures Act 1963 (Various Goods) (Termination of Imperial Quantities) Order 1978 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Foot.]

Not less than 20 Members having risen in their places and signified their objection thereto, Mr. SPEAKER declared that the Noes had it, pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &amp;c.).

WAYS AND MEANS

BUDGET STATEMENT

Mr. Deputy Speaker (Mr. Oscar Murton): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor's speech, as in past years, copies of the Budget Resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.

BRITAIN AND THE WORLD ECONOMY

3.36 p.m.

The Chancellor of the Exchequer (Mr. Denis Healey): Since the Financial Statement and Budget Report gives a full account of events in our economy over the last twelve months, I do not propose to begin my speech this afternoon with the usual historical preamble. And I shall follow the precedent I set last October by wherever possible putting detailed material about my proposals into supplementary documents which are being published this afternoon. I shall therefore confine my speech to the central features of our economic situation as we enter a new financial year and to the budgetary measures which I am asking the House to adopt in consequence.
The whole of the industrial world has found the last four years by far the most difficult since the war. The enormous increase in oil prices and the reaction to it of the industrial countries have plunged the world into the deepest and most prolonged recession since the 1930s combined with an unprecedented inflation. The period has been particularly difficult for us in Britain because we entered it in 1974 with our economy already badly out of balance, a growing deficit on our current account and severe inflationary pressures.
Four years of painful and difficult decisions have now got the economy into much better balance. Our current account has moved into surplus. Our financial position has been transformed. The year-on-year rate of inflation is well into single figures and still falling. Interest rates are far below the level of four years ago. The money supply is under firm

control and we have exceptionally high reserves. All this is reflected in the fact that the fourth quarter of last year saw a rise of nearly 5 per cent. in real personal income after tax and national insurance—the biggest quarterly rise in living standards for nearly six years.
But this transformation in our financial situation has not yet been reflected in an adequate growth of output. In consequence, unemployment remains intolerably high, though it has been falling slowly since September. It is the first purpose of this Budget to encourage a level of economic activity sufficient to get unemployment moving significantly down. But like all other countries—and more than most—we cannot isolate ourselves from the rest of the world. And here the outlook still leaves much to be desired.
Two years ago it looked as if the industrialised world was emerging from the severe recession which followed the increase in oil prices. But that recovery proved more sluggish than expected. 1977 was a disappointing year for nearly all the world. Economic growth in the OECD area was well below the average rate obtained in the 1960s. World trade in manufactures increased only 3½ per cent. compared with 9½ per cent. in 1976. Although with an increase of 8 per cent. in the volume of our manufactured exports we increased our share of world trade, in general as well as in manufactures, there was very little growth in our economy during 1977.
The problems created by the slow growth of the world economy have been made worse by the big payments imbalances between the oil-consuming countries. Some oil-producing countries cannot in the short run eliminate their surpluses through trade, so the oil consumers as a group must face a corresponding deficit. The total current account deficit of the OECD countries rose to around 30 billion dollars in 1977. But this total includes a large increase in the deficit of the United States and a large increase in the surplus of Japan.
One reason for these disparities is that other strong countries have been slow to follow the expansionary lead of the United States. These payments imbalances are at the root of the currency instability of the last few months which is itself a further threat to world growth.
If we are to solve this country's problems we need to take action on a world scale, because no single country can lead the world out of its difficulties. Indeed, no single country can by itself solve even its own problems. My right hon. Friend the Prime Minister and the President of the United States recognised this fact together when they met at Easter to discuss a programme for concerted action designed to attack simultaneously all the five major problems which are now damaging the world economy—low growth, currency instability, the trend towards protectionism, over-dependence on imported energy and inadequate flows of stable long-term capital and aid from the surplus countries to countries in deficit, including many in the developing world.
Yesterday the Heads of Government of the seven leading world economies agreed to develop their policies so as to promote a concerted approach to this group of problems in the months leading up to the Bonn Summit meeting in July. The European Council agreed on Saturday to work with determination for the higher economic growth that this approach requires.
This Budget represents a first British contribution towards that common effort as well as meeting our national needs.

Mr. Eldon Griffiths: rose—

Mr. Deputy Speaker: I remind the House of the convention that Mr. Chancellor of the Exchequer is not interrupted during his Budget Statement.

THE BALANCE OF PAYMENTS AND OVERSEAS DEBT

Mr. Healey: I shall now say something about our balance of payments and overseas debt.
Between 1973 and the middle of last year we borrowed large sums overseas to meet the consequences of the oil price increase and the deterioration in our terms of trade. Most of these loans have to be repaid in the six years from 1979 to 1984, but as we moved into balance of payments surplus and rebuilt our reserves last autumn, the Government were able to start tackling this hump of debt. It then stood at over $20 billion.
It would not be sensible to aim to pay off the whole of this debt from current account surpluses earned over the next six or seven years. That would add to the problem of current account imbalances in the world and it would not be consistent with the need to expand our own economy. The Government's aim is therefore to combine net repayment of debt year by year, with new borrowing to spread the maturities.
As part of this policy we are now repaying large amounts of debt ahead of time. In January I announced the prepayment of $1 billion of our drawings from the International Monetary Fund. Arrangements for this payment have recently been completed. I can now announce that I shall be arranging to prepay a further $1 billion to the Fund this year. This further step is made possible by our own improved position and we hope that it will assist the IMF to help other countries. This should be a useful contribution to the concerted approach to world problems to which we have committed ourselves.
In addition to these IMF prepayments, we have since October repaid or arranged to repay ahead of time $1 billion of private market debt. Thus our repayments ahead of time, made or already planned, now total $3 billion. We shall also repay a further $1 billion in 1978 on the due dates as other debt matures in the ordinary way.
The other part of our policy is to make progress with new borrowing. Since last October we have contracted new loans totalling about $630 million from the European Investment Bank and the European Coal and Steel Community. In addition, I can now tell the House that we propose to make a British Government bond issue in the New York market. The issue will be for a total of $350 million in two tranches of seven and 15 years respectively. So it will mature well after the hump of existing maturities. The United States rating agencies have said they will rate such an issue triple-A, the highest credit rating they can award.
I believe that by spreading the burden of debt repayment forwards and backwards in this way we can ensure that it does not unduly restrict our ability to expand our economy and to make an appropriate contribution to world growth.

THE FIGHT AGAINST UNEMPLOYMENT

Our main objective in the coming years, like that of other countries, must be to reduce the intolerable level of unemployment by stimulating demand in ways which create jobs at home without refuelling inflation. The temporary employment subsidy and other special employment measures which have now been in operation for three years are already providing 320,000 jobs or training places.

My right hon. Friend the Secretary of State for Employment announced a powerful reinforcement to these measures on 15th March which should increase this figure to 400,000 by March next year. I believe that in a period of world recession such measures bring immense human and social benefits. Their value is shown by the fact that although the number of men and women available for work has been increasing by 170,000 a year, unemployment has been falling slowly for the last six months and job vacancies have been rising.

But we cannot expect to see the rate of unemployment moving down at an acceptable speed unless we can create new jobs particularly in profitable firms in manufacturing industry and so strengthen the industrial base on which our whole economy depends.

A Budget stimulus by itself will not necessarily achieve this, because unless British industry can produce and sell the goods required to meet the demand created by any Budget stimulus, that increase in demand will be met by imports and set inflation going again. It will create jobs in other countries rather than our own. After some years in which the level of investment has been lower than normal it is not easy to judge the point at which a demand stimulus may prove self-defeating for this reason, both in terms of jobs and prices.

But two things are clear. The key to growth and high employment must lie in an improvement in our industrial performance. And we must design this Budget, like the measures last October, as part of a programme for steady and sustained growth which must cover a period of many years.

IMPROVING INDUSTRIAL PERFORMANCE

If the bulk of the additional demand created by this Budget is to be met by British goods then we must make sure that the products of our industry are more competitive in terms of design, delivery and price. An improvement in these fields is the prime objective of the tripartite industrial strategy to which the Government, the TUC and the CBI committed themselves afresh last month when they approved the programmes of the sector working parties for this year. Our main job now is to carry the industrial strategy down to the managers and workers in individual companies and plants throughout the country. I hope that the whole House will endorse these efforts because the future of our economy lies ultimately in the hands of those who work in British industry.

If industry is to become more competitive and unemployment is to fall, we need better product design, better marketing, more efficient use of plant and materials and more investment in new capacity. The main responsibility must fall on management and work force in the individual firms and plants. But the Government have a responsibility for providing an environment which encourages their work.

The Government will therefore continue to support the industrial strategy through industrial assistance, training schemes and the National Enterprise Board and by helping to provide a favourable economic climate. Moreover, we are now giving industry priority across the whole range of Government policies—for example, in education and local planning.

I believe that small businesses have a special role in improving our industrial performance. They have always been a prime source of innovation in British industry. The development of small businesses often produces more additional jobs more quickly than development in the larger firms. They can also play a vital role in regenerating our inner cities and our countryside. For this reason, this Budget will give a special importance to the needs of smaller businesses.

Now that our economy is in so much better balance and our financial situation


is transformed, an improvement in our industrial performance must be our overriding objective, since this is a precondition for restoring high employment. But this improvement is bound to take time. To the extent that our performance falls short in design, delivery and productivity of that of our competitors, we shall have to concentrate on making ourselves competitive in price.

It remains as true as ever that inflation is the main enemy of full employment. Monetary policy will be one decisive factor here. But our price competitiveness will also depend crucially on reducing industrial costs, of which wages are bound to remain much the most important element.

Over the last three years, the British people have given overwhelming support for pay policy, and this has played an indispensable role in keeping our industry competitive and in bringing the rate of inflation down. The country owes a lasting debt to our trade union movement for its invaluable contribution here.

I believe that the Government can help to support common sense and moderation in pay negotiations both by controlling prices and avoiding unnecessary increases in indirect taxation and by cutting income tax. But the main responsibility here again must continue to lie with the trade unions and employers who actually negotiate on pay.

THE CURRENT PROSPECT

In deciding how much stimulus I can afford to give the economy this year, I have to make a judgment about the rate at which our industry can increase its output to meet the consequent demand and about the competitiveness of the goods it produces. I must also consider the likely development of the economy over the next year or so if I take no further action at all in this Budget.

These are all difficult questions of judgment on which the margin for error is uncomfortably large. Economics, after all, is about the behaviour of human beings—the most unpredictable of all creatures. It is a useful tool of policy but still far from being an exact science—if it is a science at all. As I have warned the House on many occasions, economic

forecasts, like weather forecasts, become increasingly unreliable as they look further ahead, particularly if precise figures are attached to them—as must be the case, for example, with the forecasts which the House has instructed me to provide. But some trends are fairly clear.

Now that the inflation rate is stabilising at a level well below the increase in earnings, living standards and personal consumption should both rise substantially. Private investment in manufacturing industry rose about 14 per cent. in volume last year and is expected to show a similar increase this year. Public expenditure on goods and services is planned to rise significantly.

It is more difficult to forecast how our trade performance will develop since assumptions about our competitiveness are crucial here. But it is reasonable to expect that exports will continue to increase substantially, though higher domestic demand will probably lead to faster growth in our imports of manufactures.

This leads me to conclude that without any stimulus from the present Budget the economy might grow in the coming year by 2 per cent. to 2½ per cent., if, as is still the case, we make these calculations at the prices which ruled in 1970. If, on the other hand, we value the contribution of North Sea oil at the relative prices of 1975, after the oil price explosion, which we plan to do for all national income statistics later this year, then the increase in oil production would, of itself, add a further ¾ per cent. to our growth rate.

Against this broad estimate of the likely growth in the economy without a Budget stimulus, the increase in demand which I can afford to generate this year depends critically on the outlook for inflation. This, in turn, will depend primarily on two factors—our monetary policy over the next 12 months and the outlook for wage costs. So far as the immediate future is concerned the outlook is now firmly established and our success is evident in the figures already available.

Our year-on-year inflation rate reached single figures in January—months earlier than we predicted last November. Over the last 10 months, the month-to-month increase in inflation has been running at an annual level below 8 per cent. The yearon-year inflation rate is likely to reach 7 per cent. in spring or early summer.


Unless there is some quite unforeseeable catastrophe, it seems likely to remain fairly steady at around 7 per cent. for the rest of this year—at about the average rate for most industrial countries and lower than that of some of our competitors whose inflation rate has been rising rather than falling in recent months. But if we are to be sure of maintaining at least this level in 1979, then we must have appropriate policies for dealing both with the money supply and with pay and prices. I shall deal with each of these factors in turn.

MONETARY POLICY

Monetary policy will continue to play a central role in our attack on inflation. The money supply figures for banking March will not be published until Thursday, but I think it right on this occasion to tell the House in advance that sterling M3 grew in March by only ½ per cent. and M1 slightly less. This confirms that the trend of monetary growth has come back into the desired range, as I predicted it would after the exceptional but expected jump in January. The figure for 1977–78 as a whole will probably be just above the 9 per cent. to 13 per cent. range but under 14 per cent. But this was a year in which the money supply in Britain, as in Germany, was substantially increased by inflows of foreign currency—a factor which we took action to correct last October.

For the coming year, 1978–79, I intend to continue using monetary targets, with certain changes. Over the last year, as we have moved into surplus on our balance of payments, greater attention has rightly focussed on sterling M3, the wider measure of money supply, rather than DCE—domestic credit expansion. It is right to recognise this by making a target range for sterling M3 the focus of our monetary policy.

I also intend to adopt a system of rolling targets, in which the target is rolled forward once every six months. This will enable me regularly to reassess progress on the monetary front in relation to developments in the rest of the economy and either to continue with the existing target range or to modify it. For example, if events have moved as I would hope on

counter-inflation policy, it would be appropriate to consider in the autumn whether to lower the target range.

The target range for sterling M3 for 1978–79 will be 8 per cent. to 12 per cent. The corresponding level of DCE will be below the £6 billion which was set out in the Letter of Intent I wrote to the International Monetary Fund in 1976. This will provide both for a reduction in the rate of inflation and for an increase in economic growth. It should provide ample room for the likely increase in bank lending to industry.

In Britain, as elsewhere, the rate of growth of the money supply is bound to fluctuate significantly from month to month. As last year, it is likely to be significantly above or below the desired range from time to time. In so far as it is possible now to identify the sort of factors which may cause such fluctuations, I would expect the growth to be higher at some stages in the first half of the year than in the year as a whole. In particular, the timing of central Government receipts and payments may cause jumps in certain months such as banking May similar to that which we had in January this year.

I will, of course, use whatever instruments of monetary policy are appropriate as the year proceeds. I would hope that gilt-edged interest rates will fall later in the year as it becomes clear that we are making further progress in the fight against inflation. At the moment, however, sterling short-term interest rates are on the low side, both in relation to controlling the domestic money supply and by comparison with United States and Eurodollar rates, given recent developments in the exchange markets.

With my approval, therefore, the Bank of England is this afternoon raising its minimum lending rate from 6½ per cent. to 7½ per cent.—far below the level that I inherited four years ago.

PAY AND PRICES

Within the framework of this monetary policy, we must also do our best to ensure that rising prices and earnings do not make our industry uncompetitive.


This will require co-operation from employers and trade unions alike. We must start with a collective determination to ensure that we do not allow the rate of inflation to begin rising again from the levels we expect to reach this summer. On the contrary, we must aim at a further fall.

This will not be easy to achieve. Over the last 12 months we have been helped in getting the rate of inflation down by the appreciation of our currency and by the fall in world prices which accompanied the fall in world growth and trade. We cannot rely on similar assistance in the next 12 months. That is why the forecast in this year's FSBR shows an increase of 1 per cent. in the inflation rate by the middle of 1979, even assuming that earnings increase only half as much in the next pay round as is likely in this round. Earnings in fact will be the key to the inflation rate next year. Although earnings have increased in the current round far less than most observers expected a few months ago, they are still growing faster in Britain than in most of the countries which compete with us, and our productivity is growing more slowly.

So we shall be unable to prevent our rate of inflation from rising significantly next year unless we can achieve much lower levels of increase in wage costs than we have achieved this year. If we fail to achieve this, then, whatever the size of the stimulus I give to the economy in this Budget, we cannot expect to keep control of prices or to see the faster fall in unemployment at which we aim.

I therefore propose early discussions with the representatives of both sides of industry to see, first, whether they agree with the Government that we must keep inflation moving down next year and, second, what policies are appropriate in the field both of prices and of earnings to ensure that we achieve this objective.

I believe that the success we have achieved in fighting inflation over the last few years both through our control of the monetary aggregates and through our policy for pay and prices provides reasonable grounds for confidence that we can continue to make progress in the fight against inflation in the next 12 months.

THE SIZE AND NATURE OF THE STIMULUS

It is on this assumption that I have made my judgment about the size of the stimulus which I can deliver to the economy this year. The total size of the stimulus must, however, depend not only on the assumptions about inflation but also on the nature of the stimulus itself. It can be larger to the extent that it is clearly designed to improve our industrial performance and to strengthen our prospects of success in the fight against inflation.

The objective of the measures in my Budget today is to provide additional support for our industrial strategy partly in the form of direct help for business, particularly for small firms, and partly by strengthening the incentive to effort at all levels in industry through cuts in income tax. I also believe that by using tax cuts to increase the real value of the pay packet during the coming year I can encourage further moderation in pay settlements and a continuing fall in the rate of inflation.

I recognise, too, that if the Budget measures are to generate the support of working people for the nation's economic objectives they must also contribute directly towards the relief of poverty, to the fight against unemployment, to the improvement of our social services and to the achievement of a more compassionate and fair society. The measures I am about to describe are designed specifically to achieve these objectives.

I have, therefore, concluded that it would be right to give a full year stimulus to the economy of some £2½ billion—or about £2 billion in 1978–79. The measures should raise output by another ¾per cent. in the next 12 months and, as a result, GDP should increase by about 3 per cent. at 1970 prices—the highest increase for five years. I am satisfied that this can be done without either prejudicinging our monetary objectives and refuelling inflation or overstraining our productive capacity.

As a result of this Budget stimulus the PSBR this year will be within the ceiling I set in my letter to the International Monetary Fund last December. The forecast shows a PSBR of £8½ billion or 5¼ per cent. of GDP, reflecting a general


Government financial deficit which at 4 per cent. of GDP would be no higher than that, for example, of Germany. In fact, the PSBR for 1977–78 as forecast in last year's Budget was exactly the same as the current forecast for 1978–79—£8½ billion. The estimated outturn for last year, however, is now £5·7 billion—nearly £3 billion lower, despite additional cuts in taxation during the year.

Of all the elements in the forecast the PSBR is the most difficult to estimate correctly. But even if this year's PSBR is as high as forecast, the higher level of government debt needed to finance it will be counter-balanced by the reduced need to sell gilts to offset the domestic effects of inflows across the exchanges, which were very substantial in the last financial year.

The funding of the PSBR outside the banking system will be helped by direct sales of certificates of tax deposits, mainly to companies, and of national savings to individuals. A new issue of savings certificate is announced today, with a yield of just under 6·8 per cent. per annum over its four-year life, and a maximum holding for any one saver of £2,000.

This will mean that the forecast requirement for gilt sales will probably be much the same in money terms as the sales achieved in the last two years and somewhat smaller in relation to the institutional funds which are likely to be available. Thus I foresee no difficulty in financing the PSBR for 1978–79 consistently with the new monetary guideline of 8 to 12 per cent.

I now come to the Budget measures themselves.

PUBLIC EXPENDITURE

Last October I announced an increase in our plans for public expenditure in 1978–79 of £1,000 million at 1977 survey prices, including £400 million on construction and over £300 million on raising the rate of child benefit to £2·30 from this month. These increases were included in the Government's expenditure plans as set out in the public expenditure White Paper last January. The White Paper also made provision for the statutory uprating of the main social security benefits in line with earnings or prices as appropriate.

We have therefore decided to increase in November the rate of pension by £3·20 to £31·20 for a married couple, and by £2 to £19·50 for a single person. This is likely to represent an increase of over 4 per cent. in real terms. The real value of the pension will thus have risen by over 20 per cent. since this Government came to office when the married pension was £12·50 and the single £7·75. My right hon. Friend the Secretary of State for Social Services will shortly be announcing the full details of the uprating, including the increases in short-term benefits. Altogether, these improvements will be worth around £500 million in 1978–79 and £1,300 million in a full year. The revised national insurance contribution rates for 1978–79 now in payment were announced by my right hon. Friend the Minister for Social Security last December.

The Government's plans provided a contingency reserve of £750 million at 1977 survey prices to cover additional public expenditure measures in 1978–79. We have decided to allocate now a substantial part of the contingency reserve to such measures.

The first call on this sum is for the employment measures which my right hon. Friend the Secretary of Stale for Employment announced last month. The extra cost of these additional measures to United Kingdom employment programmes in 1978–79 is estimated at about £156 million and in 1979–80 at about £144 million. As I said earlier, these additional measures, combined with the others previously announced, will protect or provide about 400,000 jobs or training places by March 1979.

The Government are also making available further sums in 1978–79 to expand other programmes which are of particular social and economic importance at this time. Within the social services we are giving on this occasion the highest priority to health and education. There will be an allocation of £50 million in 1978–79 for the Health Service in the United Kingdom for specific improvements in services for patients. These will vary from place to place but there will be, for example, extra resources for the full opening of newly completed hospitals, facilities to cut waiting lists, more staff to help care for the elderly


and handicapped, and over 400 extra kidney machines, Education will receive £40 million to cover a higher rate of capital expenditure by local education authorities on schools and colleges and there will be additional funds for retraining teachers in subjects like mathematics, science and crafts where there is a shortage.

There will also be £20 million for environmental services, including building small factories in rural areas by the Development Commission, and for preserving the coastline. There will be provision for higher expenditure on law and order—such as police and prisons and the probation services; special assistance for certain areas affected by early steel closures; and a small extra sum for sea defences in addition to the help announced for farmers affected by storm and flood damage earlier this year. Finally, funds will be made available to promote insulation of private houses and to launch a further scheme to promote energy saving in industry and commerce. I think that this will make a helpful contribution to the energy objectives of the concerted international programme I have mentioned.

These decisions will provide useful additions to a wide range of public expenditure programmes and will also bring some further help to the construction industry. Further details will be announced by the Ministers responsible in each case.

The other increases in expenditure are designed to help the family budget. The Government have decided that the autumn increase in the charge for school meals will not take place. We have also decided to take advantage of the Common Market subsidy for school milk by enabling local education authorities to provide free milk for 7-to-11-year-olds. The net cost of these two measures is about £68 million in 1978–79.

Finally, we are raising child benefit again. As I announced last summer, child benefit was raised this month to £2·30 a week for all children, and the premium for the first child of one-parent families doubled to £1. The Government have now decided that the child benefit rate will be increased in April 1979 to £4 for all children. Meanwhile, as a first instalment of this increase, the Government

have decided to increase child benefit by 70p to £3 for all children this November. In addition, the premium for children of one-parent families will be doubled from £1 to £2 in November.

The cost of these increases in 1978–79 will be around £165 million. They will give a further major boost to child support for working families. Those dependent on social security benefits will, of course, gain from the general social security uprating which I have just announced.

In deciding on these measures of additional expenditure this year, the Government have regarded it as an essential principle that their cost should be met within the public expenditure plans published in January. Accordingly, the cost will be met from the contingency reserve for this year.

It has been argued from many quarters, including by many of my right hon. and hon. Friends, that the Government should take major expenditure decisions on measures affecting people's incomes, such as child benefit, at the same time as their main decisions on taxation. The two can then be seen in relation to each other. I believe it is right that the Government should have taken now their principal remaining decisions affecting 1978–79. Just under £200 million at 1977 survey prices remains available in the contingency reserve. Any contingencies requiring additional expenditure in the remainder of the year will be met within this figure.

The Government will consider the programmes for 1979–80 and subsequent years in the public expenditure survey. It remains the Government's firm intention to contain the growth of expenditure planned for those years within the growth which we can expect in the economy as a whole.

TAX AND BUSINESSES

I now come to my proposals on taxation. A major purpose of this Budget is to adjust taxation so as to help and improve our industrial performance. Our business tax system is generally recognised as giving very generous incentives to new investment, and the scheme for stock relief which I introduced in 1974 has also been of immense value to industry. I think the House would agree that


what industry requires now is stability in its tax environment. I have therefore decided again to make no major changes this year in the rate of corporation tax or in the levels of investment incentives.

In my Budget Statement last year I said that the stock relief scheme would continue in its present form for 1977–78 and 1978–79. I then hoped that the debate on current cost accounting might by now have reached the stage where we could move to a permanent scheme of relief. But it is now clear that more time is needed for discussion of inflation accounting and, when an accounting standard has been agreed, tried and tested, for deciding how far it can be used for tax. I intend, therefore, to retain the present scheme for 1979–80, and to continue it indefinitely until a permanent scheme can be introduced.

However, I recognise that there is continuing concern about the build-up of deferred tax liabilities in company accounts and the effect that this may have on the raising of investment capital and investment decisions. This is a matter which can best be dealt with as part of the permanent scheme. I wish, however, to dispel any anxiety among industrialists that, with the present scheme continuing indefinitely, they may be faced with a mounting volume of potential tax liabilities.

I, therefore, give this assurance now: if, this time next year, we are still unable to see what form a permanent scheme will take, we shall introduce legislation to limit the build-up of these liabilities as follows. First, the balance of the relief for the first two years of the scheme will be written off. Second, we shall build into the present scheme similar provisions for a write-off of so much of the relief for each subsequent year as remains after a six-year period. This will remove the major criticisms which industry has of the present arrangements and will enable stock relief to continue in more or less its present form until a permanent system is available.

SMALL BUSINESSES

While overall stability is my main purpose so far as company tax in general is concerned, I believe that, so far as small businesses are concerned, we can expect a significant improvement in industrial performance from some easing of the tax

regime. In my Statement last October, I announced the first changes which were proposed in the tax treatment of small firms and in particular a big increase in the relief for capital transfer tax. I can now outline the firm decisions we have made on the matters which were then under review. My right hon. Friend the Chancellor of the Duchy of Lancaster will be describing these changes in more detail at a Press conference tomorrow.

First, I intend to raise the profits limit for the small companies rate of corporation tax from £40,000 to £50,000 and to increase the limit for marginal relief from £65,000 to £85,000. Next I intend to provide that a business man who makes trading losses in the early years of an unincorporated business will be able to set them against income received in previous years. I also propose to give relief similar to that for employees last year to self-employed people and members of partnerships who are resident here and work abroad.

We are also proposing substantial relaxations in the capital gains tax rules for small businesses. I intend, as foreshadowed last October, that capital gains tax on gifts of business assets either within a family or to employees should be deferred until the assets are sold. This will be a major help in passing on a business. In addition, I propose that losses on loans and guarantees should henceforward qualify for capital gains tax relief. This will encourage investment in family companies. Finally, I intend to raise the limit for retirement relief from its present level of £20,000 to £50,000. A very large increase is, I think, justified here to help the small business man who has worked hard all his life to build up a modestly successful business.

Finally, I am concerned to limit the burden of value added tax on small firms. I am proposing to make a number of changes in the administration of the tax and, in particular, to raise the registration limit to £10,000 and to allow relief against VAT for bad debts in insolvencies. My right hon. Friend the Financial Secretary will give details later in the debate.

I am sure that these changes will be welcome. My right hon. Friends and I are still considering what further proposals we can reasonably make to help


small businesses and encourage investment in them.

I propose now, however, to give extra help to two particular sectors. First, farmers. I think it is generally accepted that farmers are in a unique position, partly because the weather can produce substantial fluctuations in their income and partly because farming is a highly capital intensive industry requiring substantial investment. I have, therefore, decided to allow farmers to average their incomes for tax purposes when they vary by 30 per cent. or more between two years and to increase the agricultural building allowance in the first year to 30 per cent.

Second, the hotel industry. In recent years a substantial increase in tourism has made an important contribution to our invisible export earnings. I therefore propose that any expenditure incurred after today on the construction or extension of a hotel with at least 10 bedrooms should qualify for capital allowances at the rate of 20 per cent. initial allowance and 4 per cent. annual allowance.

Mr. Robert Adley: Well done.

Mr. Healey: These measures will provide a valuable incentive to businesses as such.

PROFIT SHARING

I also wish to encourage profit-sharing in this year's Finance Bill. Profit-sharing schemes can encourage the employees of a company to identify themselves more closely with their company. As the hon. Member for Cornwall, North (Mr. Pardoe) has often emphasised, this can help to improve the relationship between employees and employers, encourage greater efficiency and stimulate growth. But if it is not simply to give relief to the higher paid there must be a ceiling to the amount of relief to which any one taxpayer can be entitled. So there will be a limit of £500 a year to the value of shares which can be allocated tax-free to any one employee. My proposals will take effect from next year and will broadly follow Method III as set out in the Inland Revenue's consultative document published last February. There will, of course, be full details in the Finance Bill.

CAPITAL GAINS TAX

I have studied very carefully the representations which the Inland Revenue received on its consultative document on capital gains tax and inflation. I must conclude that the practical problems for taxpayers, their advisers and the Inland Revenue alike in any scheme for indexaation or for tapering would be too great. Moreover, I do not think it would be right to give relief for inflation to investors in shares and land while investors in building societies and other fixed interest loans receive none—and while an investor can benefit from the decrease in the real value of his own borrowings.

But to lighten the burden on small investors I propose that an individual's gains up to £1,000 in any year should be exempt and gains between £1,000 and £5,000 charged at 15 per cent., that is, at half the full rate. A marginal relief will secure that only large gains of £9,500 or more in a year will bear the full rate. These provisions will apply to the year just ended and will replace the present exemption for small disposals and the alternative basis of charge which many people have had difficulty in understanding.

TAX AVOIDANCE

Lastly, a word about tax avoidance. This has emerged recently in a new form which involves marketing a succession of highly artificial schemes—when one is detected, the next is immediately sold—and is accompanied by a level of secrecy which amounts almost to conspiracy to mislead. The time has come not only to stop the particular schemes we know about but to ensure that no schemes of a similar nature can be marketed in future. So the provisions I shall be introducing this year to deal with artificial avoidance by certain partnerships dealing in commodity futures will go back to 6th April 1976, that is, before the date when the intention to legislate was announced in a parliamentary Answer.

My proposed measures against avoidance by means of land sales with the right to repurchase will go back to 3rd December 1976, the date foreshadowed in a parliamentary Answer; and I will from today counteract devices for avoiding the capital transfer tax charges on discretionary trusts and avoidance of CTT


through the use of associated endowment and term life policies.

TAX AND INDIVIDUALS

I now come to my proposals for those taxes which most concern the individual man and woman.

I think it is now generally recognised that, while the total burden of taxation in Britain is well within the international average, the proportion of total revenue derived from income tax is still too high although I have already reduced it significantly in the last three years. So cuts in income tax will account for almost all the £2½ billion stimulus which I have announced.

I know that some hon. and right hon. Members think it would be right to cut income tax this year by a much larger sum and offset the additional costs by increases in indirect taxation. In principle I have some sympathy with this view. But I believe that this year we must consolidate and reinforce our success in the fight against inflation so that we can for good and all bring down the inflationary expectations which have damaged our economy in recent years in so many ways. In this situation I cannot believe it would make sense for the Government themselves deliberately to raise the inflation rate and increase the cost of living. I will, therefore, leave the indirect taxes generally unchanged on this occasion—with one small exception.

To discourage the smoking of cigarettes which have a higher tar yield, I intend to introduce from 4th September a supplementary duty on cigarettes with a tar yield of 20 milligrammes or more. If the manufacturers fully passed on this increased duty in prices they would raise the price of 20 of these cigarettes by about 7p. About 15 per cent. of cigarettes will be affected.

The House will recognise that this supplementary duty is not designed primarily to raise revenue—it could bring in only £25 million in a full year at most—and if it results in leading smokers abandoning these high tar cigarettes, no one will be more pleased than I. In any case, the effect on the RPI will be negligible.

I have also been asked to consider an increase in the national insurance surcharge. The share of employer social

security contributions and payroll taxes in total revenue is a good deal lower in Britain than in most other countries of the European Community. But I do not believe it would be right to increase it so soon after it has been introduced, and at a time when unemployment is our major problem. It would increase industrial costs at a time when it is essential to improve our competitiveness and it would ultimately be largely passed on in higher prices at a time when the fight against inflation is at a crucial stage.

The proposals I have announced so far leave £2,400 million for reductions in income tax. I have considered carefully how they should be distributed so as to further the objectives I have set myself, to increase the incentive for greater effort and to promote social justice.

I believe it right to regard this Budget as the second phase in a process which I began last autumn. I told the House in October that, as well as increasing the plans for public expenditure in 1978–79, I was raising the level of the personal allowances fixed in last year's Finance Act by 12 per cent. so as to ensure that their real value was maintained and that I was bringing forward this increase in tax thresholds by 12 months compared with the date provided for in the Act. In practice, this increase of 12 per cent. has turned out to be slightly higher than the increase in the retail price index over the calendar year 1977.

The question I have had to decide for this Budget is whether I should devote the hulk of the tax relief now available to raising the tax thresholds still further or whether I should introduce a lower initial rate of tax. Since I have already more than fulfilled my obligation to index tax thresholds. I have been particularly impressed by the argument that the rate at which people become liable to enter income tax is too high. It is, indeed, the highest in the world. It means that many of the low paid are little better off in work than on the dole. I cannot believe that this makes sense in either economic or social terms.

I propose, therefore, to introduce a lower rate of tax, at 25 per cent., on the first £750 of taxable income. This new lower rate will be the marginal rate of tax for some 4 million of the low paid. Most taxpayers now caught in the poverty trap will find its impact that much less


severe because their tax will be nine percentage points lower than now. Other taxpayers will be £1·30 a week better off as a result of this change alone. I hope it may be possible to extend this lower rate band in future years.

I still believe, however, that it is necessary to raise the tax threshold as far as possible above the main social security benefit levels and to take as many people as I can out of tax altogether. I therefore propose this year to raise the single person's allowance and the wife's earnings allowance by a further £40 to £985 and the married allowance by £80 to £1,535.

This increase in tax thresholds will help widows and also provide the family man with special help during the second stage of the transition to the child benefit scheme. The additional child benefit which mothers are now receiving will in general more than offset the effect on family income of the reduction in the child tax allowance which we have already announced.

But I believe it also important to ensure that this change does not reduce the father's pay packet, and for this reason I am increasing the married allowance by twice as much as the increase in the single allowance. I propose, as last year, to ensure that the allowance for one-parent families is kept in line with that for two-parent families by increasing the additional allowance by £40 to £550.

Pensioners with a modest additional income have a special problem, which I expect all hon. Members will have come across in their constituencies. I therefore propose to increase the age allowance a little more than personal allowances generally—by £50 for the single person and £100 for the married—and to raise the age allowance income limit to £4,000.

The cost of these measures will be £2,150 million, of which nearly £1,600 million is attributable to the lower band and just over £550 million to the increases in the personal allowances. As a result of these increases 360,000 people who would otherwise have been paying income tax in the coming year will not now do so.

Although last October I increased the thresholds for the basic rate of tax by 12 per cent., I did not at that time similarly index the threshold for the higher

rates of tax. If I did not raise this now, people with no more than one and a half times average earnings would move into higher rate liability this year. I propose, therefore, to raise the upper limit of the basic rate from £6,000 to £7,000. This will mean that a married man with earnings of £8,500 will not be liable to tax at the higher rate, even if he is entitled to no allowances other than his married allowance. As a result, 450,000 people who would otherwise be paying tax at the higher rate will not have to do so. This will be of particular advantage to highly skilled engineers, foremen and middle managers.

I propose also to increase the thresholds to the successive higher rate bands. The 40 per cent. band will, as now, be £1,000 in length. This will be followed by two bands of £1,000, two of £1,500, one of £2,000, one of £2,500 and one of £5,500. The 83 per cent. rate will thus be reached at a taxable income of £23,000 as compared with the present £21,000.

There is a similar case for raising the thresholds for the surcharge on investment income. I propose, therefore, to raise the general threshold to the 10 per cent. rate of surcharge from £1,500 to £1,700 and the threshold to the 15 per cent. rate from £2,000 to £2,250, in line with the rise in prices.

However, it is significant that nearly half of those liable to the surcharge are over 65, and two-thirds of these have incomes below the higher rate threshold. I therefore intend, in addition to the increase I have already announced, to help those elderly people living on relatively modest income from savings by increasing the real value of the surcharge thresholds for them. I propose that for those over 65, the thresholds for the 10 per cent. rate should go up from £2,000 to £2,500, and for the 15 per cent. rate from £2,500 to £3,000. Finally, I propose that maintenance payments should be wholly exempted from the surcharge with effect from this year.

The changes in the personal allowances will take effect under PAYE on the first pay day after 10th May. Single people and earning wives earning over £19 a week will in general then get a refund of £1·30, and they will thereafter pay 26p a week less in tax. The refund for married men earning over £30 a week will


in general be £2·60 and the weekly reduction for them will be 52p. The new tax tables giving effect to the changes in rates of tax, including the lower rate band, will operate from mid-July. There will then be a further refund of about £18 and a further reduction in tax of £1·30 a week.

LIVING STANDARDS AND PAY

Let me now explain the effect of this Budget on living standards.

With the usual Budget tables, I am arranging to have published this year, as in the last two years, tables which show the effect of my tax changes on individuals at different levels of earnings. In order to illustrate this, let me take first the example of a man earning £75 a week who has a wife and two children under eleven. The tax reliefs in today's Budget will give him an extra £1·82 a week in his pay packet.

As I have said, however, these tax reliefs are only the second phase of the process which I began last October, when he got an extra £1·05 a week. From the beginning of this April, the new provisions for child benefit and child tax allowances have come into force, as well as the increased national insurance contributions. Taking all these into account, the £75 a week family is better off by £3·32 and, when the child benefit rises in November by a further 70p for each child, the family will be better off by a total of £4·72 a week.

But these calculations do not, of course, take into account the effects on living standards of wage increases over the current pay round. Taking again the man on £75 a week, if his earnings rise by 10 per cent. in accordance with the Government's guideline, his standard of living will rise by nearly 6 per cent. in real terms between August 1977 and August 1978 as a result of last October's measures and those I have just described.

The man earning £50 a week will do even better. His living standards will rise by nearly 7½ per cent. On the same basis, a single man on £75 a week will be about 4¾ per cent. better off, and on £50 a week will be just over 6 per cent. better off.

Thus I do not in this Budget make any call for sacrifice. With the rate of inflation remaining low, and with these sub-

stantial tax reliefs, modest increases in earnings should ensure that real living standards can continue to rise over the year ahead without unduly increasing our industrial costs. This is the best possible recipe for commercial and industrial success. It is the only recipe for curing unemployment.

Mr. Deputy Speaker: Under Standing Order No. 94, the first motion, entitled "Provisional Collection of Taxes", must be decided without debate. When that matter has been disposed of I shall call on the Chancellor to move the motion entitled "Amendment of the Law". It is on that motion that the Budget debate will take place today and on the succeeding days. The remaining motions will not be put until the end of the debate on Monday, and they will then be decided without debate.

PROVISIONAL COLLECTION OF TAXES

Motion made, and Question,
That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following Motions—

(a) Gaming licence duty in Scotland (Motion No. 3).
(b) Value added tax (registration limits) (Motion No. 6).—[Mr. Healey.]

put forthwith, pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

AMENDMENT OF THE LAW

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to—

(a) the making of any amendment with respect to value added tax so as to provide—

(i) for zero-rating or exempting any supply;
(ii) for refunding any amount of tax otherwise than by virtue of a provision relating to bad debts;
(iii) for reducing the rate at which tax is for the time being chargeable on any supply or importation otherwise than by reducing that rate in relation to all supplies and importations on which tax is for the time being chargeable at that rate; or


(iv) for any relief other than relief applicable to goods of whatever description or services of whatever description; or

(b) the making of any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable; or
(c) the making, except in relation to farming or market gardening, of any provision for affording relief from tax by the adjustment of fluctuating income.—[Mr. Healey.]

[Relevant European Economic Community Documents: R/1721/77, R/2080/77, R/2473/77, COM (77) 640, the Economic Situation Annual Report, R/654/78 and R/655/78 on the economic situation in the Community and economic policy guidelines.]

4.44 p.m.

Mrs. Margaret Thatcher: It is the custom of the Leader of the Opposition always to congratulate the Chancellor of the Exchequer on the manner in which he has presented his Budget speech, although, as he will know, one reserves one's comments on the contents for a little later. I warmly congratulate the Chancellor on his different presentation. His speech was much shorter, which, I believe, is a great advantage. We had been told that it would be freer of jargon and a good deal simpler. However, I am bound to say that I did not notice it. This is, of course, the Chancellor's thirteenth Budget. The style has changed a great deal, and I think that the House has benefited from the change in style and from its being shorter.
With regard to my comment on the Budget, perhaps it is known in this House but not outside that this has to be wholly off the cuff—[Interruption.] The House knows that I have no advance knowledge whatsoever of what the Budget contains. Therefore, I know no more than the public knew in listening to this broadcast. I hope that they will not—

Mr. Andrew Faulds: These are proceedings of the House. It is not a broadcast.

Mr. Deputy Speaker: Order. The hon. Member for Warley, East (Mr. Faulds) must restrain himself.

Mrs. Thatcher: It is also the custom that the Opposition's reply is made tomorrow by the Shadow Chancellor. It will, of course, be made. Finally, the Leader of the Opposition makes some preliminary comments, or attempts to

comment, on the Budget that we have just heard.
I noted that the Chancellor did not go into his own immediate history of his last 13 Budgets or of his last four years. Indeed, the way in which he started the Budget meant that we scarcely recognised the picture which he drew. As he knows, under his stewardship output in this country has not increased for four years. The right hon. Gentleman has presided over the biggest increase in unemployment in the post-war period. In terms of inflation he has presided over both the biggest increase and the peak in the post-war period.
Although the Chancellor now says that the year-on-year rate of inflation is down to 9·5 per cent.—he and we hope that it will soon be down to 7 per cent.—he omits to say that from the housewife's point of view this is 9·5 per cent. on top of 16·2 per cent. on top of 22·9 per cent. on top of 19·9 per cent. Therefore, it is not surprising that the housewife does not entirely see it in exactly the same way as the Chancellor.
The right hon. Gentleman also omitted to say that inflation is still three times as high as it is in Germany in the same world circumstances, twice as high as in Japan and higher than in any other major competitor country except Italy. He also omitted to say that under his stewardship the fall in the standard of living has been greater than any other we have experienced in the post-war period. Indeed, the average wage earner is £6 a week less well off than he was when the Labour Government came to power. He also omits to say that he has presided over the biggest increase in personal taxation.
All that the Chancellor is doing today is taking off just a little of the tax that he has put on. He also omits to say that the Budget is delivered against a background of 4¾ million people dependent on supplementary benefits and against a background in which industry is not in a competitive position because it has far lower profits than it should have in real terms and is still suffering from the old problem of far too many restrictive practices to be competitive.
I must say, therefore, that as I listened to the Chancellor I thought that the trailer to his Budget had been a good deal more exciting than the show itself.


The fact is that the whole of his strategy during the last four years has failed and that instead of tinkering with the system we ought to go in a totally different direction. I believe that the whole of the right hon. Gentleman's strategy has been to take more of the nation's income to be spent by the Government and to leave less of it to be spent by the people from their own pockets. Indeed, if one studies what has happened in the past four years, every description shows it. The Government side of the House believes in the Government spending the people's income. The people believe in having a higher proportion to spend themselves.
The right hon. Gentleman did this—it was his strategy, I believe—to try to get higher growth, which he did not get, and to try to get better social services, which he has not got either. So the entire strategy has failed. He set out to create a Socialist paradise, and all that we have is Socialism. Therefore, the right hon. Gentleman starts off as the prisoner of his previous 12 Budgets and as the prisoner of his party's philosophy.
As we know, every Budget has two effects, and perhaps the right hon. Gentleman knows this better than most. It has the immediate effect of tax cuts which one can see. It has the longer-term economic effect, which comes with the money supply and the amount which he borrows, and sometimes the longer-term effect, which is not immediately seen, can be very damaging. But that effect ought to be foreseen.
May I deal first with what is seen with some of the tax cuts that he has mentioned? First, I take small businesses. Will the right hon. Gentleman please remember that it was his Government who successively damaged small businesses with capital transfer tax and then with one tax after another—[HON. MEMBERS: "VAT."]—with the Employment Protection Act and with one Act after another. I notice that people with small businesses, like other people, will have to take the increase in interest rates which he has announced, and they will be very harmful to them. We note that at last the right hon. Gentleman recognises that they are the prime source of innovation and that he has given them some reliefs. We welcome the reliefs which he has given to small businesses—especially those

on capital gains tax, which will help a great deal—and especially the arrangements which he has announced about losses being allowed against previous income. We also welcome the changes on value added tax, although we wish that he had accepted our amendment last year and raised the threshold to £10,000. We are also very pleased about the relief for bad debts.
As for other tax changes, most of us welcome the intention to make stock relief permanent, although a number of us would have preferred it this year. This is causing great problems in the balance sheets of many companies particularly small businesses but almost all companies, and the sooner that deferred tax liability goes the better it will be.
I think that the right hon. Gentleman's main tax changes will very soon disappear without being noticed. He has announced changes on personal income tax to the tune of about £2,150 million. Last year, he announced changes on personal income tax to the tune of about £2,250 million, and they very soon disappeared without trace, in that they were absorbed—[Interruption.] I am reading from the right hon. Gentleman's broadcast last year, in which he said that it would cost a lot of money to do all that he proposed. He said that it would cost £2,250 million—[HON. MEMBERS: "Off the cuff."] Of course, I armed myself—[HON. MEMBERS: "Some cuff."] It is a very good cuff. Hon. Members should try having one themselves.
The Chancellor announced fairly moderate reductions in personal income tax, and I believe that most of us were expecting more, provided that he could make room for them in the public expenditure side of his Budget. I notice that he has brought back again the reduced rate band, one of his predecessors having abolished it. The reason why it was abolished, of course, was that it was very complicated administratively. One of the effects of bringing it back is that we could never, in fact, have a tax credit system—[Interruption]—

Mr. Deputy Speaker: Order. The House must listen to the right hon. Lady.

Mrs. Thatcher: It is a great disappointment to many of us that the right hon.


Gentleman has not reduced the standard rate of income tax. We left it at 30p. It is now still 34p. It still presses very hard on middle management—the very group of people whom we need to encourage if we are to get industry back into the position where it must be if it is to be competitive. The changes which the Chancellor has made on investment income are very small and could have been bigger.
On the whole, the right hon. Gentleman has done some double counting in the figures which he announced at the end of his speech. He omitted to point out that the increases in national insurance contributions which come into effect this same April will be offset against some of the tax reductions, and some people will notice very little difference in their net take-home pay.
I come to what I call the longer-term effect of the Budget, of which the two most important features are the public sector borrowing requirement and the money supply. I must warn the right hon. Gentleman that when he said that the public sector borrowing requirement would go back to £8·5 billion, many of us thought that it was very high if he was to keep down the level of inflation in future years. That in fact is reversing his previous policy. His previous policy had been to reduce public sector borrowing as a proportion of the gross domestic product. He has reversed that policy, and now he is increasing borrowing as a proportion of the gross domestic product. That gives rise to the very great dangers of laying the foundations of a future round of inflation in the years to come.
The Opposition are very glad that the right hon. Gentleman has reduced the money supply targets from a band of 9 per cent. to 13 per cent. to one of 8 per cent. to 12 per cent. He said that he thought the money supply would be just above this year's target, about 14 per cent. That is very much on the high side, bearing in mind the broad width of the target which he set himself originally. It is undoubtedly because he has overshot that target that the market has been signalling interest rate increases and, because he has overshot that target, the interest rate has to go up.
We utter a warning here that the tax cuts which he has made are welcome, provided that he is prepared to make sufficient reductions in his Government expenditure not to have inflation in future years. On that we shall reserve our judgment. The right hon. Gentleman knows full well the dangers. He announced them in his speech. We are not certain that on the programme which he has announced he will avoid inflation in future years. Many of us think that he has laid the very foundations for it.
I notice one or two features with regard to public expenditure. I notice, first, that we had to join Europe before the Labour Party could get school milk back for the 7 to 11 age group. I notice, secondly, that he announced with a very great flourish an increase in expenditure on school building of £40 million. That would be the equivalent of about £20 million in my time. It is about the smallest increase that I have ever heard of in relation to school building. It was almost not worth announcing—[HON. MEMBERS: "Oh."] I did not say that it was not worth giving. I said that it was not worth announcing in the Budget.
The question is how we are to judge what the Chancellor has said. We have to make a judgment not only of what he says that he has done but of whether it will be done. I have been through the right hon. Gentleman's previous Budgets, as I usually do, and noted the previous way in which he has set them out to the people. It has been one tale of euphoria after another. The Opposition are very conscious of the Budget which he introduced before the last election What he did then is very similar to what he appears to be doing now, in that apparently he is cutting tax in advance of a General Election.
At that time, he announced that his actions were taking
the top off the peak which inflation would otherwise have reached
and that this would give
a solid prospect of a steady improvement in 1975.
In fact, in the following year inflation went up to 27 per cent., so his forecast was totally wrong.
At the time of his next Budget, the Chancellor said that his main job was making sure that people had jobs that


winter. What happened? The unemployment rate went up steadily. In the next Budget he said that he had
laid the foundations … for a tremendous leap forward next year.
Somehow he stumbled, and he did not look before he leapt. In his next Budget we were promised "an economic miracle," and somehow that foundered too.
The Chancellor could have made all the general comments that he made today—and he has made them—on almost every Budget that he has presented to date. But not one single Budget that he has presented has brought an improvement in prosperity to this country. Indeed, they have brought a flat output and a reduction in living standards.
We judge the Chancellor not by his words, because we have heard so many words before. We judge him not by world summitry, to which he gave a great deal of attention. It is not the first time that world problems have gone to world summits. We have had one every year, and every time the message has been of confidence, but we have not in fact seen any recovery as a result of that world summitry.
The truth is that the Chancellor is a very late convert to tax cuts. He said that he would make people howl with anguish over increased tax. He made everyone who worked for a living howl with anguish over the increases in taxes that he made. His policy and that of his Government is to take an increasing proportion of the national income for the Government to spend, so that the increased social wage is determined by the Government and there is a lower real wage in the wage packet. I see that hon. Members below the Gangway are nodding.
The Labour Government have told the people that they will take their money and look after it for them. Now, the people are saying that they want more of their own money to look after themselves in their own way. The Chancellor's conversion to tax cuts is only election-deep, and we shall deal with it accordingly.

Mr. Faulds: On a point of order, Mr. Deputy Speaker. I wonder whether you would give some guidance to the House in the new circumstances of the broadcasting of our proceedings. The Leader

of the Opposition, in her introductory comments, referred to the outside audience listening by mechanical means to our proceedings today. I have always understood that it is one of the conventions of the House that reference was not even made to those in the Strangers' Gallery. Therefore, how is it possibly right to make reference to an outside audience of a much larger number?
Secondly, it is surely improper that the Leader of the Opposition should refer to the proceedings of this House as "a broadcast". That is not what we are doing in this place. We are discussing specific matters on specific occasions. In this context the Leader of the Opposition made it quite clear by her statement that she was using this House not to argue the merits or demerits of the Budget but to make an overt party political broadcast, supposedly off the cuff.
Perhaps, Mr. Deputy Speaker, you could give us some guidance—or perhaps Mr. Speaker could do so on another occasion—on the conduct of Members in these new circumstances. Surely the guidance should be that Members should not make reference to the broadcasting of the House while we are conducting the proceedings, and that there should be direct comments—[HON. MEMBERS: "Reading.") No. I am not reading, I am referring to some notes that I have made. This is more off the cuff than the comments of the Leader of the Opposition.
Surely there should be direct comments in the House only to those who are actually here and not to the listening audience outside. In this the Leader of the Opposition patently failed.

Mr. Robin Maxwell-Hyslop: Further to that point of order, Mr. Deputy Speaker. The hon. Member for Warley, East (Mr. Faulds), in addressing you, presumably forgot that while he was here in the Chamber, Mr. Speaker has asked whether the outside broadcast channels were switched on at the moment. Since Mr. Speaker was referring to the hon. Member for Warley, East in that case, the hon. Member must be alleging that Mr. Speaker was himself out of order, which is a somewhat improbable hypothesis.

Mr. Faulds: rose—

Mr. Deputy Speaker: Order. The hon. Member for Warley, East (Mr. Faulds) must resume his seat. Broadcasting is now a fact of life in this place. On the question of the conventions, there are no conventions existing in that connection.

5.8 p.m.

Mr. Terry Walker: The whole House will congratulate the Chancellor on his Budget, not only on his presentation but on the content. After so much euphoria in the Press and on television, the Budget proposals, as put before the House, seem to come as an anticlimax. As this debate is going out on radio at the moment, we have a different situation from that which applied in the past. But, despite this, all the speculation about what the Chancellor would or would not do can only come to an end when the matter is brought to the House.
Certainly I believe that the Chancellor has made the right decision by going for greater tax allowances rather than reducing the basic rate of income tax. All of us, as constituency Members, find great difficulty in dealing with people who get into the poverty trap. It seems ridiculous that people who are retired and who have paid in for their pensions all through their working lives should suddenly find themselves still liable for tax when they retire. The increase in allowances will help these people in their commitments, as many of them will now find that they do not have to pay tax at all.
This will work through the tax system and will be of great benefit. I disagree with the Leader of the Opposition. I think that this action will be appreciated by people when they see that they have more money in their pockets. There will be great benefit to ordinary people and families.
It is important to note that the child benefits are being brought forward substantially by the Chancellor's proposals. This will help families. One-parent families, about whom we hear so much, are considerably assisted by the doubling of the amount from next November.
On the charges on school meals that were proposed for the autumn, hon. Members have played a considerable part in making sure that the Chancellor and the Government were aware of their feelings. It is more or less a victory for Back-

Bench Members who have campaigned continually for this over a long period. It is a nonsense to suggest that these charges should be increased at this time, when we are curtailing the amount of money that people have in their pockets.
Another thing that must be welcomed, certainly by the Labour Party, is the restoration of free school milk for children between the ages of 7 and 11. Some of us will remember that when the provision of free school milk was reduced by the right hon. Member for Finchley (Mrs. Thatcher) and was taken away there was considerable feeling within the trade union movement and the Labour Party. However this has been achieved, whether or not it is through the Common Market, it is to be welcomed and I am sure will be welcomed by the Labour Party.
The measures announced by the Chancellor to help the National Health Service will also be widely welcomed by the Labour Party. We need more hospitals and we need to reduce the waiting lists. The help to provide 400 more kidney machines will be of immense benefit, to my constituents and many other people who are concerned over this matter.
The insulation of private houses is a matter about which we look forward to hearing more in due course. Many hon. Members on both sides of the House felt that the previous proposals for the public sector of housing created an anomaly, and we want to know more about this before saying very much more. This kind of thing has to come about if we are to conserve energy, which is vital.
Within the context of the Budget we shall wait to hear more about the amount set aside for environmental help and law and order. These matters are of concern to Members on both sides of the House. The resources that are offered should be used in the proper way.
The Budget that has been presented today is a move in the right direction. As the Chancellor said, it is the second phase of what was started by his announcements in October last year. In the improved economic situation I believe that the position of ordinary working people must also improve accordingly. That is why I hope that we shall go forward and that the Chancellor will have a chance to present another Budget after this one and another Budget after that. I do not agree with what the Leader of the Opposition


said, that this is an electioneering Budget. I believe that it is a process that we are starting. That process is to provide for working people and their families a better deal and a fairer redistribution of wealth, power and influence in this country.

5.13 p.m.

Mr. Anthony Nelson: The Chancellor's thirteenth Budget cannot of itself smack of good financial management. To appear so many times in the House of Commons during a relatively short period and to present conflicting and varying Budgets is an extraordinary way in which to run the country's finances. It seems to me that if we are to try to restore any degree of stability or certainty either to individual or family budgeting or to company budgeting, we have somehow to go back to the system of annual budgeting, even though that is less convenient for a Chancellor and depends upon his making longer-term predictions on relative movements within the economy.
I should like to say a few words about the Chancellor's proposal to repay early some of the borrowing from the IMF and some of the other debt. I am greatly concerned—I have registered my opposition in the House on many occasions—at the degree to which the Government have put us in debt to a record and massive level. This is not only imprudent but immoral. I believe that the Government have saddled future generations with a level of debt which is improper and will place a considerable burden upon them. They have destroyed a heritage by their own profligacy and overspending, and have subsidised a rate of consumption which the country cannot afford by saddling future generations with the responsibility of repaying excessive borrowings. Therefore, I condemn this level of debt wholeheartedly and condemn the Government's policies, which led to effective receivership by the IMF a year ago.
I do not wish to be churlish about my support for early repayment of this debt, but I am bound to say that it seems to be repaying with one hand and borrowing with the other, for we are told that while some of those moneys may be repaid the Chancellor is to go to the New York bond market for, I believe, about £300 million-worth of foreign currency borrowing. This may appear relatively attractive at a time when the dollar

is weak on international markets, but over the term of this loan it is quite possible that sterling will decline at a greater rate than the dollar. If the rate of inflation of this country is markedly higher than that of our industrial competitors, and the rate of inflation is much higher even than that prevailing in America, it is inevitable that in the long run sterling must be relatively weak. If that is so, the cost of repaying the debt will be considerable.
Though there may appear to be a short-term advantage in terms of interest rates, in borrowing a considerable amount on the American exchange, the reality will probably be that it will be very expensive to repay. I suspect that it is no coincidence that the right hon. Member for Leeds, East (Mr. Healey) will almost certainly not be the Chancellor who will be held accountable when the House has to repay that money. It is easy for him to borrow now, because he has not to bear the responsibility of paying back an increased real sum at the end of that period of borrowing.
I was interested to note—it was fairly unexpected—the substantial increase in the minimum lending rate which was announced today. This will have a severe impact on interest rates generally at a time when people were hoping that the gradual reduction over the last year would have a beneficial impact on the rate of inflation. As these higher rates of interest work their way through the economy there will be further pressure on the retail price index, much of which may negate the advantages and benefits of the tax cuts which the Chancellor has announced today.
More pertinently, many of us will be concerned that this will once more place pressure on the building societies to increase their mortgage interest rates. Though there has been a welcome decrease in these rates in recent months, it would be a matter of serious concern to many families if their mortgage interest rates were to increase again. Bearing in mind the many young families and young married couples who are now having to pay escalating prices for new homes throughout the country, it would be an impossible burden at a time of prospective wage restraint, with relatively little given away to many in middle management by way of tax cuts, if their


mortgage interest burden were to increase substantially.
Though help has been given at the lower end of the incomes scale today, for those in the middle—that is, I suspect, the vast majority of earning people in this country—there are severe dangers that the year ahead will show that the benefits provided through tax cuts and tax relief will be more than offset by increases in costs that they have to face. Many of us are extremely concerned about this.
However, I wholeheartedly welcome some of the tax measures. As a Member representing a farming and agricultural constituency, I welcome the proposal to introduce an averaging system of a tax on farming income. Many of us in the Conservative Party have been pressing for this for some time. Given the vagaries of agricultural production and the relatively long-term nature of the product involved, it seems sensible to apply a different time scale in terms of tax assessment.
Clearly, the Committee stage of the Bill will give Parliament an opportunity to consider whether the 30 per cent. variation, which is the sine qua non for such assistance or averaging, is the appropriate figure to choose, bearing in mind the difficulties of many farmers in recent years and also the substantial costs which many farmers have in meeting the interest on mortgages or on borrowing to finance their stock and capital equipment. Therefore, although I welcome that move, I reserve the opportunity to examine carefully what tax relief is to be given and to consider whether the 30 per cent. variation between income in various years is too wide for a sufficient number of farmers to qualify for this help.
I turn now to the reduction in the level of basic tax to 25 per cent. on the first £750 of income. Although I welcome this, I hope that it will be followed in subsequent Budgets by increases in the band to which this rate should apply. I hope that this will be built upon and that the lower rate will apply for a wider band of income than has been announced today. I hope very much that this will be remembered by my right hon, and hon. Friends when we are returned to office.
Nevertheless, although I welcome this move, it is nonsense to have a 25 per cent.

rate applying at the bottom end rising to 83 per cent. at the higher end. That is far too wide a band of taxation. It involves far too many levels of taxation within the range, and at the upper end it is totally ineffective because it restrains many people from giving of their best. If the higher marginal rates of tax were to be lowered, it undoubtedly would restore to this country a good deal of income from those who have a higher propensity to save then than do those at the lower end of the income range. This, in turn, would have a substantial and beneficial impact on the level of private investment.
I also welcome the announcement that profit-sharing arrangements will include a provision for £500-worth of shares to be given tax free to employees within companies. This is something which the Conservative Party has been pressing for for a long time. It is fundamental to our philosophy that we encourage personal ownership—whether a property-owning, share-owning or chattel-owning democracy. We believe in personal ownership. We believe that it is healthy for people to own things. We believe that it makes them more responsible for that ownership, and that it will encourage people to provide for themselves when age or disability falls upon them.
The sad fact is—this is a reflection on bad management by successive Governments since the war—that those who have worked hard during their lifetimes and who have consistently put aside a small proportion of their incomes so that in their retirement or when they are ill or suffer from disability can look after themselves without calling on their families or on the State find their savings taxed out of existence at one end and their real value eroded by inflation at the other end. This has been another immoral aspect of bad Government management successively and the impact of inflation on the savings of ordinary people.
I look to this Government in their remaining months in office, and particularly to the next Conservative Government, to make a real impact on encouraging people to save and protect the value of their savings. It is essential in the remaining part of this century to take this step. There is a total of 7,500,000 people aged over 65—a figure which is


likely to remain constant until the end of the century. But it is interesting to note that there will be a dramatic increase in the number of people aged over 75. The figure in that respect will increase by 23 per cent. in the next 25 years to about 3,500,000 people, and over the same period the number of people aged over 85 will increase by 42 per cent. Therefore, towards the end of the century we shall have many more very elderly people in our community. It is also easily and empirically predictable that a higher proportion of those elderly people will not have gainful employment. Therefore, they will be an increasing financial burden on their families, the community and the Government.
I believe that we must accept the important responsibility of looking after the elderly in our community. I also believe that the severe financial burdens which this will place upon us, not just in the next year covered by the Budget but in the next 25 years, will not be met unless we recognise the importance of once more returning to people the ability and responsibility to look after themselves financially. We shall do that only if we give proper incentive and encouragement to enable people to save, to enable them, out of the product of their labours, to put by something for when they are elderly, and when they have done so to ensure that the product of those hard-earned savings is not taxed by effective surtax.
I come to one aspect of the tax changes which I find disappointing. I refer to the pitiful increase in the threshold for unearned income. I believe that "unearned income" is a misnomer. It is hard-earned income. There are many people who are living on fairly low incomes—this argument applies to many in my constituency, which contains a relatively high age group—and they now find that they are paying effective surtax on incomes substantially below those of an average industrial worker and where they have minimal other sources of income apart from those savings. They are asking "Is this right? We fought for the country, we worked hard all our lives and we took it upon ourselves to be reliant on nobody else but ourselves." This, perhaps, was regarded as a Victorian or Edwardian virtue. I think that it should be a modern virtue and should once more

be encouraged. The minimal announcement of the Chancellor today that he intends to increase those threshold levels to a maximum of £2,500 for the higher rate of investment income surcharge does not begin to cope with the problem or to encourage people once more to save or to provide for themselves.
This shows a fundamental difference in attitude between the Conservative Party and the Labour Party. This is sad for me as a young politician, because I should like to move towards a modus vivendi on many of these aspects, but clearly Labour Members wish consistently to move towards a collectivist State, with centralised care—a State where services and subsidies are handed out indiscriminately and where the individual will not be allowed freedom of choice, or even to make financial provision to make that choice. This is wholly regrettable to the Conservative Party and the Chancellor has given us little cause to believe that the Government are taking our criticisms seriously.
The money supply expansion figures which the Chancellor announced today in a band of 8 per cent. to 12 per cent. for the year ahead may indicate a relatively higher rate of inflation for the year ahead than many of us had imagined. This endorses our suspicion that the benefits which have been so dramatically and theatrically given away on this occasion will in reality be absorbed by a high rate of inflation.
The fact that the band for monetary expansion last year was exceeded because of mismanagement by the Government gives us little cause to expect that it will be met in the year ahead, particularly when the expansion of domestic credit is expected to be £6 billion. Many of us hoped that the Chancellor would announce a much more radical means of administering monetary control. The movements in the last year in M3 and M1 indicate that the Government by concentrating predominantly on the management of M3 have had only a partial impact on economic movements and the rate of inflation because of the highly variable movements of M1, which in many cases have moved alarmingly against the trend set by M3.
If we take into account M4, which includes building society deposits, we find that there has been a marked tendency,


partly because of the tax treatment of building society interest, for people to move their deposits from clearing banks into building societies. The real expansion in money supply over the last 12 months is therefore probably even higher than the Chancellor's announcement that it was slightly outside the band that he set of 9 per cent. to 13 per cent. Taking into account the growth of building society deposits over the last 12 months, it is clear that monetary expansion has been even larger and many of us would like to know the Government's predictions for the year ahead and what impact there will be on prices in the short term.
One of my greatest concerns is that while we have relatively high inflation in this country, the value of sterling is bound, in the long run, to come under further pressure. It is already clear that in the last two months the decline in the value of sterling by over 5 per cent. in its trade-weighted index value will soon have an impact on retail prices. The Financial Times reported today on the increases in wholesale and raw material prices which industry is having to pay. This is alarming and gives rise to concern for the future.
It is notable that the Chancellor's prophecies today went only to the end of this year. He told us little about the rate of inflation that we may expect next year. Many of us suspect that once more we shall be on a Socialist spiral of decline in the real value of net incomes and increasing burdens through higher prices.
In welcoming the Chancellor's statement as far as it goes, I issue a warning about dealing with the level of inflation and the management of monetary targets on which I hope we shall have some reassurance in this debate and on the Finance Bill.

5.33 p.m.

Mr. Kenneth Lomas: I hope that the hon. Member for Chichester (Mr. Nelson) will forgive me if I do not discuss much of what he has said. I have limited myself to a maximum of 12 minutes and I shall try to confine my remarks to that time.
As one who is not seeking re-election, I find it possible to look at Budgets with a different and detached view from those who will be facing the hustings in six, 12

or even 17 months' time. Watching the faces of the Opposition during my right hon. Friend's statement, I was struck by the fact that they looked stunned, shocked and almost shattered by the fact that he had taken them to the cleaners. I conclude that the Conservative Party does not like good news.
I see that Liberal Members have gone away to think. It is always a good idea for them to do that. I believe that they will come back and decide to support us. They do not want a General Election.
I agree that we should be grateful that we are able to repay our debts ahead of time, but, like many others, I am disturbed about the high level of unemployment in this country and I do not believe that enough has been done in the Budget to try to get out of the impasse of 1·4 million people unemployed.
Hon. Members who were in the House 10 years ago will remember the debates on the document "In Place of Strife". If the then Labour Government had had the guts to stick by that we would not have been faced with the problems that have confronted us in the last four or five years. But that is water under the bridge.
I am glad that the Chancellor has decided to introduce a new series of savings certificates at 6·8 per cent. per annum. That is an extremely good move which will encourage savers. I am sure that everyone will be glad that pensions have been increased by £3·20 for a married couple and £2 for a single person. Of course, we shall be told that it is not enough, but then it never is.
I am also glad that the Chancellor has made money available for improvements in the National Health Service and I wholeheartedly welcome the fact that some of the money is to be used to provide an additional 400 kidney machines. This is long overdue.
I am pleased that we are restoring free school milk for children aged between 7 and 11 and that there will be no increase in the price of school meals in the autumn.
As a smoker, I believe that it is right that people should pay more for cigarettes with a high tar yield, and I therefore welcome the Chancellor's proposal that the price of cigarettes should go up if their tar yield is 20 milligrammes or more.
I hope that no hon. Member on the Government side of the House will be euphoric about the Budget. If it were an election Budget, the Chancellor would have given away far more. I do not agree with those who insist that we should have only one Budget a year. I am glad that we have got away from that arcane practice, which is crazy. It is right that we should bring forward new ideas and meet challenges as they arise through the year.
The Chancellor had a difficult job. He had to steer a course between the demands of the CBI and the hopes of the TUC. He has a pretty thankless job and he is always bound to be damned by most people and praised by only a few.
I have often said that whatever the Chancellor gave away over £2,000 million, he would have to take back in some other way. The one thing that is certain—this is stressed to me by my constituents—is that people want a reduction in taxation and a pretty rapid reduction at that. I am a little disturbed that when we already have 10 tax bands the Chancellor has now increased it to 11 bands. That is inefficient. I asked earlier this month what savings would be made in administrative costs if the 10 bands were reduced to five and I was told that savings would total £400,000. That is not a tremendous sum, but the bands are too close and should be widened.
Those in middle management earning between £8,000 and £10,000 a year should pay tax at 35 per cent. instead of the present 50 per cent. or 55 per cent. Those in lower senior management earning between £10,000 and £14,000 a year, who are paying 60 per cent. or 65 per cent., should have had that reduced to 40 per cent. In addition, no matter what the Chancellor or anyone else says, the top rate of 83 per cent. is penal and far too high to be justified. People want more money in their pockets. We must ensure that they can have that, while also ensuring that those at the lower end of the scale get the greatest benefits and, in that respect, the Chancellor has done well.
I would have been prepared to accept a move to a flat rate of VAT. A 10 per cent. rate for VAT would help the small business man and those who want to do their sums more quickly. An across-the-board rate of 10 per cent. would bring in about £600 million. That is the figure

that appeared in a Written Answer in Hansard on 27th February in column 81.
I have mentioned the cost that would accrue if the Chancellor decided that there should be some change in the tax bands. I asked the Chancellor, in a Written Question, what would be the cost if the taxable income up to £7,000 was reduced to 30 per cent.; from £7,001-£10,000 to 35 per cent.; from £10,001-£14,000 to 40 per cent.; from £14,001-£21,000 to 60 per cent.; and over £21,000 to 70 per cent. The cost would be £2,375 million. These are the sort of problems with which we are faced all the time. I hope that something can be done.
I have referred to increasing the rate of VAT to 10 per cent. Such an increase would have increased the retail price index by about 0·8 per cent. That increase could easily be lost by other measures.
I am glad that the Chancellor has decided not to increase the employers social insurance contribution. On the other hand, he might have hinted that at some stage he will be thinking along the lines of the policy of the Labour Party—namely, that a wealth tax might be a good thing, to bring in some more revenue.
The Chancellor has missed his opportunity in another respect of easing the burden for those at the lower end of the wages and salary scale. That could be done by scrapping the road fund licence and with it the Swansea Driver and Vehicle Licensing Centre. The centre at Swansea has been one of the greatest disasters with which we have been faced. I have in mind the many letters that I have had to write to Swansea to get mistakes put right. The centre is a nonsense. If we were to get rid of the road fund licence and increase the tax on petrol, it would mean that the man who wants to have a large car that does only a few miles to the gallon would pay the price of having the privilege of driving such a car. In the same way the chap with a small family car—an Escort, or whatever—who takes his family to the seaside, but who drives fewer than 8,000 miles a year, which is the mileage that the average person drives, would benefit.
In addition, the offices at Swansea could be used on a more profitable basis. We should save a lot of form filling and letter writing. It would no longer be necessary to spend an enormous number


of hours searching out those who have not paid for their road fund licences. My hon. Friend the Member for Newham, North-West (Mr. Lewis) would not have to wander around New Palace Yard and the House Car Park examining road fund discs to see whether the tax has been paid. That would save my hon. Friend a lot of time as well.
There has to be some restoration of the cuts that have been made in public expenditure. I am glad that my right hon. Friend has done so much for the National Health Service. In my opinion that is priority No. 1. However, housing is another factor that he should consider, for that is vital.
There is no point in hon. Members on both sides of the House blaming the Government, whichever Government they might be, when there are many employers throughout the country, and many in West Yorkshire, who are not prepared to take advantage of the new incentives and the new technology that is now available. On this point, I have in mind the wool textile industry in particular.
I must conclude even though there is so much more that I could say. However, I realise that others wish to speak. I do not believe that this is an election Budget. It is not a Budget that is giving massive handouts. It is a pretty fair Budget. It is moving in the right direction. There will probably be another Budget before the House rises for the Summer Recess, and probably there will be another one before the end of the year. However, this is not a Budget that panders to every whim of one political party or one section of society. It had to be a Budget that would chart the course for the next 12 months away from the stormy waters of international booms and slumps to a more sane and realistic society, in which all of us, whatever views we may hold, may share the benefits that the nation deserves.
When people ask "What is in it for me?" they should be asking "What is in it for them?" By "them" I mean that we should be giving consideration to the weak, the sick, the infirm and the disabled. I have tried to put my thoughts on record. When hon. Members have read my right hon. Friend's speech, I

think that they will recognise that he has tried to be fair.
I did not like the way in which the Budget was presented. I refer to the fact that there are to be separate statements made by various Ministers. We shall have to collect them altogether. We should ignore the broadcasting box. My right hon. Friend should make the sort of Budget speech that he has made in the past, without pandering to the broadcasting people. If he had done that, the full story would have been in Hansard tomorrow. Instead, we shall have bits of paper all over the place. I hope that when my right hon. Friend presents his next Budget he will do that. I am sure that he will.

5.46 p.m.

Mr. Dafydd Wigley: The Chancellor of the Exchequer referred to the much better balance that he perceives now exists in the economy compared with previous times. I find it difficult to accept that there is a much better balance at a time when throughout the United Kingdom there are 1½ million unemployed and when in my Wales 90,000 remain unemployed. That factor in the imbalance remains, and while it remains we cannot be satisfied with the balance as it exists.
In the Budget, the main thing for which my colleagues and I were looking was a positive step towards overcoming the crucial problem of the unemployment and false deployment of our manpower. The fact that we have 1½ million out of work means that we have human resources that are being wasted. That leads to economic wastage, and it can also lead to social tragedy. We hoped that steps would be taken in the Budget as part of a general strategy towards eliminating, or partially eliminating, our unemployment.
We do not accept the myths that are put forward from both sides of the House that an automatic transfer of resources from the public sector to the private sector or from the private sector to the public sector necessarily leads to greater employment, and although we hear such theories being put forward from both sides of the House to support their respective political theories, the fact is that a transfer of money by increasing taxation or lowering it does not necessarily mean anything in terms of jobs. Everything


depends entirely on the implications of the taxation and the way in which the yield is used. Taxation can lead to higher or lower unemployment, and the outcome of this Budget remains to be seen. There are other possibilities, apart from the transfer of money., that can possibly generate employment. Having listened to the Chancellor, I am not certain about the direction of Government policy.
We understand that the supply of money, the M3 figure, will increase by 8 per cent. to 12 per cent., which suggests that possibly greater employment may come, from increasing inflation. However, at the same time the PSBR is to remain within a ceiling of £8,500 million. In that context we cannot see that there is a coherent strategy for ensuring that the transfers that are taking place are designed primarily to ensure greater employment.
Another factor that could be brought forward to ensure a greater increase in employment and a decrease in unemployment would be to restrict imports. That may or may not be acceptable for other reasons, but it would be a strategy. That too, has not been forthcoming. When I consider all these elements, I cannot see what is the strategy or that the tinkering around—I am sure that it is liked by some—with the taxation system will get to the nub of the problem of providing more jobs.
The Manpower Services Commission produced a report last year entitled "MSC Review and Plans", which included the cost to the Government of unemployment. The facts come home in a staggering way. In the first month of unemployment for a married man with two children, the cost to the Government, taking into account the loss of income tax revenue, the cost of unemployment benefit and the cost of supplementary benefit, is £330. Over 18 months the cost runs at about that level and terminates at £335. That is about £80 a week. If that is the amount of money that has to be spent to keep people unemployed, it implies that the money would be better used to ensure that those who find themselves unemployed are employed by the Government in something useful.
In Wales—and I am sure that the figures for Wales correspond to the Great Britain figures—we have 100,000 houses

that are unfit, 60,000 families on the waiting list and 15,000 building workers unemployed. However, it seems that we cannot bring these problems together one with the other. That is the central thrust of strategy that we would have been seeking in the Budget, but it has not been forthcoming.
We would have hoped that when the Chancellor was looking at aid to smaller companies, which we welcome, he might have looked at the possibility of helping the entrepreneurs who are setting up for the first time and giving employment to other persons, by means of a tax reduction. That would have to be a once-off development, because obviously it would be open to a fiddle if it could be repeated. But I believe that there is a need for giving extra incentive to someone who takes the initiative of setting up employment not only for himself but for others and, therefore, saves the Government about £330 per month per person.
In the context of unemployment—unemployment in Wales and in Scotland and in the North-West and North-East regions of England, no doubt—there was again no reference to improving the Government's regional policies. Some 16 months ago the Government were forced to axe REP. Certain other short-term measures have taken its place, but they involve nothing like the expenditure nor the securing of jobs that REP helped to secure for Wales. We shall have lost probably 10,000 jobs in Wales as a result of this move. I do not believe that the Government have a positive strategy for responding to the regional dimension of unemployment.
I should like to follow the comments that were made about interest rates. If we are looking for stability for industry, one of the areas where we would have sought such stability would have been in interest rates. Having brought them down to 6½ per cent., I should have thought that they could possibly have stayed at that rate. One of the worst features for industry in planning expansion is the uncertainty of where to pitch its return rates in relation to interest rates which it has to use as a base measuring stick. I believe that in recent years one of the greatest uncertainties in the economy has been the high rate of interest. I am sure that this has crippled many companies. I


had hoped that we were coming to a time when we could live with lower rates.
I turn now from the central theme of unemployment to one or two of the details. I welcome the two-year averaging for farmers. I suggest that a three-year average would be even better, for the reason that the exceptional factor that involves one year may continue into the year which immediately succeeds it. It may run over from one year to the next. I welcome the Government's moving in that direction.
I get the impression that the Government are dabbling with the idea of profit sharing. I am very much in favour of profit sharing, but I reserve judgment on the scheme which has been outlined.
We welcome the child benefit increases but regret that those who are on social security, invalidity benefit and so on will lose by one hand what they gain by the other hand. The increases in child benefit were because of the need for these resources to be available to the mother. That need is even greater for the families—particularly one-parent families—which are on supplementary benefit, invalidity benefit and so on. To take away by an offset in social security payments the increase that such families get from child benefit is to take away from those who need the most help. I regret that it has not been possible to find a way to overcome this problem in the Budget Statement that we heard this afternoon.
We welcome the increase in the tax thresholds. We have pressed over a number of years to get back to the level at which the tax thresholds stood five or six years ago. That would have needed another £1,000 million. I should have liked to see the standardisation of VAT at 10 per cent. That would have provided £700 million of that £1,000 million towards the further increase of the thresholds and would have taken more people out of the taxation net.
People say that this is not an electioneering Budget. I suggest that the fact that the Chancellor decided to give help to 4 million people within the lower band, whereas only 300,000 people were benefiting from the increase in the threshold, indicates that there is an element at least that he is trying to get the greatest possible number of people involved in the

benefits rather than hitting at the end where it is most needed.
We welcome the proposals for pensions, school milk and school meals and the tightening on the avoidance of taxation.
Regarding the Health Service, the £50 million will help but it is a drop in the ocean. We are talking of a Budget of £5,000 million. Therefore, it is 1 per cent. Of course, 1 per cent. is better than nothing, but it is only 1 per cent., and likewise with education.
There are aspects of the Budget that we welcome, but our main criticism is the lack of strategy on the creation of jobs. That we greatly regret.

5.56 p.m.

Mr. Roy Hughes: I rather felt that the hon. Member for Caernarvon (Mr. Wigley) was a little uncharitable, because this afternoon my right hon. Friend the Chancellor of the Exchequer undoubtedly delivered a good Budget. That was why the Leader of the Opposition, in her opening remarks, spoke with such a forked tongue and at other times seemed so bitchy about the good proposals contained in the Budget.
Of course, we welcome the tax reliefs and the incentives that they provide.

Mr. Deputy Speaker: Order. The hon. Gentleman has used an expression which, although it does not come within the rules laid down in "Erskine May," is in my view unparliamentary.

Mr. Hughes: I bow to your ruling, Mr. Deputy Speaker, and withdraw it.
Certainly we welcome the decision to reintroduce free school milk. The people of Britain have never forgotten who took it away from the 7-to-11-year-olds.
There is the promised help for areas which have been affected by steel closures. That, again, will be welcome, particularly to towns, such as Ebbw Vale, which are suffering so badly at the present time.
Another section of the population which has undoubtedly been helped by the Budget is the pensioners. The proposed increases of £3½20 for a married couple and £2 for a single person are, I suppose, generous. Likewise, the pensions allowances are welcome. Indeed, one may safely say that this Labour Government, throughout their period of office, have


been generous to pensioners. But the fact must be faced that many of them are still suffering, and the question of justice for them still remains on the agenda.
There is the additional £50 million for the National Health Service. As the hon. Member for Caernarvon said, this additional amount is merely a drop in the ocean. I suppose that to a very limited extent it will help to reduce waiting lists. We know that standards in the Service have been deteriorating for quite a long time. I know that that is so in Newport. A good deal of the deterioration stems from the reorganisation of the Service carried out by the Conservative Government under the direction of the right hon. Member for Leeds, North-East (Sir K. Joseph), who believes in cuts in public expenditure. The fact is that, as a result of that reorganisation, many of the funds of the National Health Service are now being swallowed up by bureaucracy.
I come now to what to my mind is the central point of the Budget and the whole economic strategy of the Government. The Chancellor said that the present economic recession in the West is general in character. I suggest that there is specifically a United Kingdom problem as well. The Chancellor knows that he cannot reflate as much as he would like to do for fear of an inflow of imports.
My feeling is that, despite the welcome proposals in the Budget, the bulk of the 1·4 million people at present on the dole will remain there.
A question must be asked. How much longer can a Labour Government accept the direction of the Treasury which permits such a high level of unemployment, with all the waste and demoralisation that this involves? My blunt reaction is that if imports are keeping nearly 1½ million people on the dole it is time that imports were curbed.
With our ailing manufacturing industry, free trade is no longer good for Britain. Some of my hon. Friends say that there is nothing Socialist about import controls, but at least they are interventionist and there is a relationship with our Socialist philosophy. There are others, whom I would call Euro-fanatics, who are most anxious that we should curb Japanese imports, particularly cars. How will the British economy benefit if we halt the import of Datsuns and Hondas,

which will only increase imports of Renaults, Fiats and Volkwagens?
The Government have it in their own hands to change course. The Cambridge Economic Policy Group in its recommendations a fortnight ago made some good proposals. First, it sounded an ominous warning when it said that if the present Government's policies continued unemployment could rise to 5 million in the next 10 years. That represents one in five of the working population of Britain. For those of us who have been brought up in the post-war era of full employment, this is a difficult figure to contemplate.
We know that manufacturing production in the country is no higher now than it was seven years ago, but imports of manufactured goods have risen by two and a half times. The facts speak for themselves. They lead to the road to ruin for an industrialised nation such as Britain. We are witnessing the de-industrialisation of Britain. The whole purpose of the Chancellor's strategy must be to try to reverse this trend. If he succeeds, the balance of payments problem will be eased and it will permit faster growth and more reflation than he was able to announce this afternoon.
To bring that about, we require a 50 per cent. increase in investment in manufacturing industry over the next 10 years. That would take the form of new and expanded manufacturing facilities. This would displace foreign suppliers in home and overseas markets. Our own suppliers would provide more of our own markets, and we should also be able to compete more successfully in overseas markets. In order to get the benefit from increased investment, we need import controls and discrimination in favour of our home manufacturers. Only in this way will the new money invested in our manufacturing industry be made to pay off.
I appreciate that the type of proposals that I am putting forward would not make us popular with the multinational companies or with the Common Market, but the priority of a Labour Government should be to stick by their principles and to look after the interests of the British people. I appreciate that there are other sides of the argument. For instance, people may have to wait a few months for the delivery of their favourite, new model, motor car, but surely that is


better than keeping 1½ million people on the dole.
Let us think what would happen to the morale of our workers in the factories if such a policy were followed. Morale would be lifted overnight. We have heard the smears and innuendoes that car workers have suffered through the media over a long period. Not long ago our car industry was supplying over 90 per cent. of the British home market. Now it supplies only 50 per cent. Let us imagine what would happen to the British economy if we could achieve that former figure.
We have heard much in the House recently about the steel industry. If the British car industry could regain such a large section of the home market, the crisis in the steel industry would vanish almost overnight. What a benefit that would be to areas where steel is concentrated, such as South Wales. What is more, such policies would receive the overwhelming backing of the trade unions. I see a parallel with what happened in the 1930s. Ernest Bevin, the General Secretary of the Transport and General Workers' Union, saw the wisdom of the Keynesian analysis, whereas the mandarins in the Treasury were years behind.
The enigma of North Sea oil and the bounty that flows from it could have the effect of blurring our understanding of what is happening to industry in Britain. It could give us the opportunity to live in a fool's paradise for another decade or so. This should not be allowed to happen. North Sea oil revenues must not be frittered away in meaningless tax giveaways to produce another property speculators' boom such as we experienced in the early 1970s. North Sea oil revenues must be invested in manufacturing industry to try to reverse the trend which I have outlined so that our economy is put on a firm basis for the future.

6.9 p.m.

Mr. Alick Buchanan-Smith: I shall speak briefly because other hon. Members wish to speak in this short debate today. I shall first mention two items which caused me to have some reservations and to experience slight amusement. I refer to the two proposals, important as they are, for

school meals. I share my right hon. Friend the Leader of the Opposition's wry amusement that it has required a Common Market subsidy and incentive for a Labour Government to restore these measures.
The Chancellor's proposals on school meals are most important. I am worried, however, that, welcome though this move may be, it is being applied, as we argued at the time of legislation on school meals and school milk, across the board while other items of educational expenditure are being held in close rein. We already have schemes to help those who cannot afford school meals or school milk. Many parents and people involved in education would prefer the money to go towards improving facilities, buildings and so on. Therefore, welcome though this money may be, it is not necessarily being put to the best use for education.
One of the central features of the Budget, which I very much welcome, is the reduction of income tax. Specifically I welcome the new lower rate of income tax, which will be generally and rightly welcomed. When the Chancellor introduced it, he said that he particularly wanted to remove the anomaly in our society by which it is worth more for some people not to work. I am glad that he acknowledges that anomaly. None of us wishes to see an abuse of the social security system. The system is abused, I believe, because of its complexity, which makes the task of those who seek to abuse it that much easier.
I do not agree with hon. Members who believe that we could eliminate this abuse by wielding the big stick. The best approach is to use the carrot. The Chancellor's action to introduce lower rates of tax and an incentive that makes it worth more to work will also help to reduce or remove some of the abuses. His action comes not before time. The longer that abuses are allowed to continue, the less are people encouraged to look for an incentive to work and the more difficult it becomes to root out the abuses. I hope that this incentive will be increased in the future with higher thresholds.
I welcome, too, the Chancellor's action in relation to small businesses. All the items in the Budget are to be welcomed, and they will help small businesses. Our smaller businesses contain far greater potential for job and wealth creation than


Governments in the past have been prepared to admit. Here, too, however, I have a reservation, as what the Government have given they have also taken away with the 1 per cent. increase in minimum lending rate. For many smaller businesses, the bank overdraft is what looms largest when the statement comes in. While the Chancellor has rightly attempted to give incentives, these are offset by the higher MLR.
I welcome the effect on small businesses in two specific respects. The first is the averaging of incomes for farmers. Representing as I do an agricultural constituency, I know how welcome that will be. I have argued for this move, but are we right to confine it to farming? There are other industries which have small firms which suffer from seasonal and other variations that are beyond their control. They do not have the resources of larger firms to weather the storm. I have tried to impress this point upon my right hon, and hon. Friends. The Chancellor's action will be most helpful to farmers and horticulturists, but there is a case for extending it to other smaller businesses and I hope that this will be considered.
The second aspect concerns building allowances for hotels. Our hotel and tourist industries have been treated as Cinderellas of the service sector for too long. Much lip service has been paid about what the tourist industry does for our foreign exchange earnings and for employment, particularly in areas with few alternative sources of work. The building allowance has been long deserved and is to be welcomed. But, while I do not wish to appear grudging, I must voice yet again my reservations. Why impose the 10-bedrooms restriction? It means benefit for the main centres of population because that is where the larger hotels are located, and they are doing well anyway. The employment problems are in the remoter areas which make a great contribution to the tourist industry and foreign exchange earnings but where the hotels have fewer than 10 bedrooms. May I suggest to the Chancellor that he increases this concession to give much wider benefits to employment by extending the scheme to the smaller hotels?
My next reservation concerning small businesses is that the Government have

not looked widely enough at other service industries. For far too long these industries too have been treated as Cinderellas. Manufacturing industry has been regarded as good, and service industry has been regarded as of less value. If the Government genuinely want to increase the wealth-creating output of manufacturing industry, they must realise that that will lead to a greater demand for services.
Let me give one example from the oil industry in my area. One of the striking developments of that industry concerns not the manufacturing side but the smaller service concerns such as welders which are an integral part of the development of the industry. These firms are indigenous, being run by Scots or other British people, and they service manufacturing industry which is based abroad. The Chancellor said that the Government want more innovation and enterprise, but he should realise that it is extremely difficult, irrespective of how big the concessions are, for the small firm to move straight into the manufacturing sector. Often the route to innovation and manufacturing begins in the service side, where, by gaining skills and expertise, the small firms move on into the true innovating and wealth-creating roles to be found in manufacturing industry.
In relation to small firms, I beg the Government, and the Opposition as well, not to make the distinctions that we have made in the past between manufacturing industry and service industry, because very often service industry is the road through which we get our innovation, through which we encourage the small man to set up and through which we get job creation and everything else that goes with it.
I should like to make two concluding points. The first is about jobs. Here I echo very much what the hon. Member for Caernarvon (Mr. Wigley) said. I believe that we are becoming seriously out of balance in our attitude towards jobs and employment. I welcome, of course, as we all do, the temporary employment scheme that we have. I do not have them to any great extent in my constituency because of North Sea oil development, but they operate in Scotland generally and particularly in the West of Scotland.
However, my worry is that the temporary employment schemes, for which the Government take so much credit and in which so much money is invested, are in grave danger of becoming increasingly permanent. We are building up in these areas a great reliance on them, and the whole economy of the areas is becoming increasingly dependent on Government subsidy of one form or another. This is bad. It is bad in terms of the whole attitude and everything else in relation to these areas.
I am unhappy about the fact that, in all we are doing in regard to TES and so on, we are not doing enough to generate the longer-term jobs on which longer-term prosperity will really depend. I believe that we are in grave danger of treating all these schemes simply as substitutes for genuine long-term job creation in the future.
This is where I return to what I said a moment ago generally in relation to the encouragement of small firms. I believe that a great deal of the money that is going into temporary employment schemes should be given in the kind of way suggested by the hon. Member for Caernarvon—in first-time grants to get people set up in new business. This is where the Welsh Development Agency and the Scottish Development agency come in. I believe that far too great a part of the budget of those agencies is being used to prop up and to help firms that come on bad times. That may be needed; I am not saying that it is wrong. Over the years, however, I should like to see the balance of the budgets of these agencies change so that they become pump-priming operations and provide the money that sets up new industry and new jobs rather than simply propping up old jobs, which is not the way in which to build a modern and prosperous economy.
Lastly, I make one comment about the thing that makes possible what the Chancellor has done today. As we all know, the basis of it, quite simply, more than any other single thing, is oil. In relation to our balance of payments and the savings that oil makes, that is the one real thing that makes a minor expansionary Budget of this nature possible.
What worries me, however, is this. First, on the general front, the trouble is that we are doing this because of oil, but

other countries in the Western world are doing just about the same without oil. That is the worry. We are not making enough of our opportunities with oil in relation to the rest of the economy as compared with the kind of expansion and prosperity which is beginning to be shared by other countries in the Western world.
Therefore, I hope that in relation to our whole economy and to the Chancellor's decisions—whether they are to give more away in terms of spending by the individual, which I believe is the right choice to exercise, or for the Government to use this money in terms of greater public expenditure, by which they hope to stimulate more activity of this nature—the Government do not use the wealth that oil provides simply to give us the breathing space or a bit of a pain-killing operation for the ills from which our economy now suffers.
I hope that the Government do not use our oil money in the sense of filling the gap or of making our economic ills less painful than they really are. I hope that the money and the time that it gives us will be used for the generation of new jobs and new investment in productive manufacturing industry, and to give us a real step forward and a real advantage that we can turn to our use as compared with our competitors in the rest of the Western world. Unless we are prepared to use oil in this sense as a springboard to make our economy stronger than other economies, this one-for-all opportunity that oil has given us, and which the Chancellor is using to some extent today, will be lost.

Several Hon. Members: rose—

Mr. Deputy Speaker (Sir Myer Galpern): Order. I should like to accommodate at least four hon. Members before we start the Private Business at 7 o'clock.

6.25 p.m.

Mr. Andrew F. Bennett: I very much welcome the Budget, very many of its provisions are very welcome indeed. I am particularly pleased with the announcement that charges for school meals will not be increased in the autumn. That is probably one of the areas in which we can judge whether this is an election Budget.
I very much hope that this is not merely putting off an increase in school


meal charges in the autumn but is, in fact, a clear change of policy by the Government and does not mean that at some future date there will have to be a larger increase. I hope that the Government have decided that they will not pursue the policy of moving towards an economic charge for school meals but will recognise that this is a very effective way of helping families and giving them support.
I also hope that it will be recognised in the debate that this should not be measured as money that should be given either for school meals or for other educational provision but rather that we ought to be making the comparison between expenditure on school meals and on other forms of family support.
Although it is clear that the school meals service has some relevance to education in that it is difficult to teach during the afternoon children who are not well fed at dinner time, it is much more significant in terms of family support and help for the family rather than in terms of the education service. If we make the comparison between money spent on school dinner subsidies and money on family support, we make a very good case for the school meals subsidy, whereas if we make it a comparison between that and education we find ourselves on rather more difficult ground.
Therefore, I particularly welcome the decision not to increase school meal charges, although I hope that it will not mean that we are deferring such a decision but that we have a clear change of policy.
This is particularly important for those who work in the school meals service. It has been particularly unfortunate that many of the women, who are already on very low pay, found their job security threatened because of the number of children who stopped taking school dinners last autumn. It would be far better for that group of people if we could have relative continuity in the service, and not merely defer an increase in the school meal charges for some time and then have a very large increase, which would have the effect of discouraging children from staying for meals and reducing the employment prospects in the area.
We also have to be careful about some of the effects of a large increase in charges on the children whom we protect from such increases. I have in my con

stituency several instances of children who were protected from the increase. Because of the means test, they were entitled to free school meals. But they then found that their three or four best friends at school had switched to taking sandwiches, so they found that they had to eat their school dinner, which was free for them, on their own or go to the hardship of paying for sandwiches and not taking up the benefit to which they were entitled.
Therefore, I welcome this measure. I hope that it indicates a major change in the Government's policy that we shall continue to have school meals subsidised and that we shall see this as a significant form of family support.
I also welcome very much the announcement that child benefit will be uprated in November to £3 and next April to £4. I would have hoped that the Chancellor could have gone a little further, because in the child benefit scheme there is provision for different rates of benefit to be paid for children of different ages. I should have particularly liked my right hon. Friend to look at the possibility of paying out a higher rate for children who are aged between 16 and 18 and who remain in full-time education. It seems to me that in a great deal of the youth opportunities programme which has been developed we are developing facilities for the children who leave school but we are not giving encouragement to those who stay on at school.
I know that local authorities, on a means-test basis, can give small grants to children who stay on in sixth forms, but in practice very few of these are given. I should have thought that the Government could have looked this time at the possibility of introducing a higher rate of child benefit for children in the 16-to-18 age group as some indication that the Government offer support to families who encourage their children to stay on at school, and some encouragement to those children who stay on at school and often find that the amount of money they can have to spend is very much less than that of their friends who, in some instances, have quite well-paid jobs.
I also welcome the announcement of the uprating of pensions, but it is sad that upratings of any benefits are announced in April but do not take place


until November. If we are to have annual upratings, I hope that the procedure can be simplified and the time scale narrowed.
I welcome the announcements about the provision of school milk to the 7-to-11-year-olds, although this is already done in many areas. Since there is still a substantial milk surplus in the Common Market, we should consider other ways of ensuring that youngsters get the milk rather than let it go to waste.
I am glad that more is to be spent on law and order. I hope that this means that the Home Office will quickly be able to approve Greater Manchester's application for an increased police establishment. I hope that there will then be more policemen available to Stockport—not so much for law enforcement and catching criminals as for crime prevention. The most important thing is that policemen should be seen on the streets. Policemen walking the beat are one of the most effective discouragements of vandalism.
I am rather disappointed that nothing has been done for the traditional training schemes, particularly apprenticeships. Newspapers like the Manchester Evening News have pages full of job advertisements. Many Stockport firms complain that they cannot recruit enough skilled workers. Some trade unionists say that they should pay more, but, certainly in Stockport and probably throughout the country, there is a shortage of skilled workers.
This is the paradox—a shortage of skilled workers and 1½million unemployed. There will be an increase in the labour force of 1½million people by 1986, and with more industrial investment the number of jobs will decrease. Thus, there is a possibility of 5 million people lacking jobs. Many of my constituents say that the logical answer is a shorter working life—with men retiring at 60—a shorter working week or a shorter working day. At the moment such schemes would cause problems for industry, particularly in Stockport, which would find difficulty in skilled recruitment.
The Chancellor should be considering ways of encouraging the number of traditional apprentices, particularly since the population figures mean that there will be a bulge of school leavers every year for the next four or five years—struggling for

probably the same number of apprenticeships—followed by a steady decline in the number of school leavers. We should try to increase apprenticeships over the next few years. Those administering the youth opportunities scheme are doing a good job with new methods of training, but the Chancellor could have done something more.
It is odd that a firm investing in new machinery, which often reduces the number of employees, qualifies for tax relief but that a firm investing in apprenticeship programmes does not. The Chancellor could have made a small contribution to improving youth employment and increasing the number of skilled workers.
Something could have been done to help those who have been out of work for a long time. After being out of work for 12 months, my constituents are at a severe disadvantage when going for jobs. Employers tend to prefer someone who is changing jobs or who has been out of work for a short time. There are natural reasons for this. It is also difficult for someone unemployed for a long time to give a confident account of himself at an interview.
We should encourage these people to return to employment. A small amount of Government money—possibly a subsidy to employers or some assistance to the job applicant—would do much to help them. We should have particular sympathy for them. They are the hardest hit by the unemployment situation. Those who have been out of work for a short time, particularly if they had a good redundancy payment, are nothing like as badly affected financially. In those two areas particularly, the Chancellor could have done more.
Like my hon. Friend the Member for Huddersfield, West (Mr. Lomas), I regret that the Chancellor did not keep the promise that he made in his Budget Statement two years ago to abolish the road fund licence. His reason then was that it would have encouraged people to move to smaller cars, since the same revenue would obviously be raised by increasing petrol duty. The vehicle licensing set-up at Swansea is in complete disrepute, which is bad for the law. It is now difficult for the police to enforce the law, since people put notices on their windows


saying "Tax applied for" and it is virtually impossible to check.
However much one complains about computers and the Swansea system, it is unfair to blame individuals. The basic flaw in the system is that we are all bad at filling in forms. When one went to one's local town hall or tax office, someone there could explain how to fill in the form. Now, it has to be posted and it takes a long time to put things right. Often complaints lead to more complications. I do not see how one can alter the computer. However hard one tried to improve the system one could not get rid of the basic flaw.
The road fund is a poll tax. Those who use their cars very little pay as much as those who use them a great deal. I would welcome help to those, in rural areas for instance, who have to use their cars to travel to work but use them very little otherwise. I should also like some assistance to be given to elderly people who build up a small mileage but who have to get out for shopping, holidays or days out.
I would not want to reduce the number of jobs at Swansea, as my hon. Friend the Member for Huddersfield, West suggested, but if those working there concentrated on keeping up to date with changes of ownership and worked on MOT and driving licence provisions they would still be in full employment.
I very much welcome the Budget. I hope that in the next month or two, or perhaps during the debate on the Finance Bill, there will be an opportunity to consider a little more tax relief for firms which are carrying out or increasing apprenticeship training. I hope that consideration will also be given to help for the long-term unemployed, those who have been out of work for more than 12 months, to make it easier for them to get back into work.
I very much welcome the provisions for putting off, or not carrying out, the increases in school meals charges. I also very much welcome the increases in child benefit.

6.40 p.m.

Mr. Edward Gardner: I think that when the country has had a chance to reflect on the provisions of the Budget there will be a sense of disillusionment and disappointment that they

have not satisfactorily matched up to the hopes that were raised in anticipation of the Budget.
One of the principal problems that the country has to face—failure to solve it will mean much despair and distress—is the problem of unemployment. Its most disturbing feature is not the total figure of unemployment but the fact that one-third of the 1½million people now unemployed are young people, under the age of 21.
This Government came into power in 1974 on the slogan "Back to work with Labour". I can identify nothing that gives any hope that the young people or any of the unemployed can hope to go back to work with this Budget.
However, I welcome, as the whole House and the country will, the increase in the pension for elderly persons, of whom I have many in my constituency. If one were trying to point to the real victims of the Labour Government and the inflation that has followed upon their policies, one would say that the elderly were the principal victims of inflation and the Labour Government. They deserve the relief now offered to them, because they are among those who have suffered most. But there are still the unsatisfactory and unjust—indeed, some might well describe them as penal—levels of taxation on investment income.
I am delighted, as I believe the whole House is, that the farmers will now be able to have their income taxed on a spread over a number of years. I was particularly pleased to hear the Chancellor say that there would be more money for farmers whose land, equipment and buildings had been damaged by flooding. In the North-West of England this has been a serious problem. I hope that the Government will not delay long in telling us exactly how much money such farmers can now look forward to, in the hope of repairing the immense damage that was done by the floods.
Can Ministers also give us some idea what is happening to the EEC funds that have been diverted, so far as one can see, almost exclusively to the South-East of England, leaving those who suffered in the floods in the North-West without any relief from that source?
I am equally pleased by the fact that the Government have decided, belatedly,


to help small businesses. Small business men are also among those who have suffered worst at the hands of a Labour Government. I think that it will be realised—certainly by the small business men, who will not forget what has happened over the past four years—that the reliefs about to be given to them indicate not a change of heart but rather a change of tactics in anticipation of the forthcoming General Election.
The small business man and the philosophy of the small business are wholly incompatible with Socialism which is out of tune and out of sympathy with, and has no time for, the small business man. What it is doing now is merely an attempt to win support that it does not deserve. But I believe that the Government will be disappointed by the political results of their efforts, because I do not believe for one moment that these people are likely to forget what has happened to them over the past four years.

Mr. Cyril Smith: I ask the hon. and learned Gentleman not to tell the Government. They might not do it.

Mr. Gardner: I do not want to discourage them. I believe that they dare not do anything but what they are doing now, because they must know that, as I believe the whole country appreciates, the key to solving the unemployment problem and the real hope for the unemployed lies not in big business but in small businesses.
The ability of the small business man and small businesses is one which this Government do not possess—the ability to reduce unemployment drastically. For that reason, from whatever source it comes and for whatever reason it may be given, I welcome the fact that help is now to be given to small businesses.

6.47 p.m.

Mr. John Lee: In the very few minutes that I am allowing myself, I begin by observing that it is a thousand pities that for the second year running my right hon. Friend the Leader of the House has so arranged business that the debate is cut short prematurely at 7 o'clock. I believe that however important the cemeteries may be in Sheffield, they are less important than the country's economy. I find it extraordin

that my right hon. Friend, who has the reputation of being a Back Bencher's man, should twice have been responsible for this kind of arrangement.
I should like to make a few general observations before returning briefly to the Budget. As several of my hon. Friends have pointed out, what is missing—to some extent this is because the Government are dependent upon the support of their parties, particularly the Liberal Party—is a coherent strategy with regard to unemployment. It is significant that my right hon. Friend the Chancellor of the Exchequer did not stick his neck out to say by how much he expected unemployment to be reduced as a result of these measures.
Another matter relates to the whole question of the level of sterling. I share with the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) disappointment that the minimum lending rate is being raised. I think that his criticism is valid, but it should be supplemented by something even more important. There is a considerable case for saying that the level of sterling is too high. This action is likely to raise it still further. If that happens, as I fear it will, this will lead to a diminution of our competitive bite in export markets, when we all know that the world recession is by no means over.
There is a particular reason why it is very important that we should keep our interest rates down. There are countries that can perhaps be described as the Third world, but we regard those in the most prosperous part of it—the developing nations, the Brazils, the Nigerias, the Mexicos, the Malaysias and so on, and the oil-rich countries such as Venezuela—we should in the next few years be seeking to replace them as the main recipients of exports of consumer durables that formed so much of the boom through the 1960s.
It may be forgotten sometimes that one major factor responsible for the sustained period of quasi-full employment in the 1950s and 1960s was the welcome introduction of the first-time car, the first-time television set, the first-time washing machine and so on. There was thus a mass market for consumer durables in this country and in the developed world.
One reason for the present recession, of course, was the increase in oil prices.


Another is that, in terms of consumer goods, we have almost reached saturation point. What is now taking place, on the whole, is a process of replacement. I do not say that there will not be a further expansion. We hear—not with unalloyed enthusiasm—that there is scope for even more cars on the road. So there may be, but the great expansion of cars on the roads in this country and in Western Europe is obviously over, so that we look more and more to the richer of the developing nations for our markets.
If we allow sterling to rise, or encourage it to rise, which will be an inevitable outcome of the rise in minimum lending rate, I think that we shall suffer as a result. Certainly there has been no sign lately that the Bank of England and the Chancellor of the Exchequer have been taking measures to counter the appreciation of sterling. I do not share the views of those who say that sterling is endemically weak. It may, indeed, be pulled down temporarily as a result of the dollar weakness, but as a result of the fact that we know that we are to have increasing supplies of North Sea oil—not indefinitely, but for at least a very considerable time—sterling will on the whole be a strong currency.
That is in ironic contrast to the position only a year or so ago. I think, therefore, that one of the main tasks that the Chancellor of the Exchequer ought to set himself is to try to reduce the level of sterling and to take countervailing measures against the danger of its appreciating to such an extent as to blunt our competitiveness in the world markets. But it is particularly important that we should be competitive in the markets of the developing world with the Americans, the Germans and so on.
I have one or two other points to make. I shall try to be brief because I should like to leave enough time for one other hon. Member to speak in the debate.

Mr. Deputy Speaker: The deadline is 7 p.m.

Mr. Lee: I am looking anxiously at the clock and trying to be fair to other hon. Members, Mr. Deputy Speaker.
There are, of course, a number of things which are good about the Budget. In fact, it seems to me to be a very shrewd Budget in many respects. The

right hon. Lady the Leader of the Opposition floundered around in the first part of her speech in a way that I believe no one has done in making an immediate reply to the Budget since Herbert Morrison's reply to the Butler budget of 1953. If it is suggested that it is an electioneering Budget, what is wrong with that? It has happened many times before and it will happen in the future. The weakness, from the tactical point of view, of the position in which the right hon. Lady finds herself has been made quite clear. It is not only in regard to school milk.
I am very glad to note the proposals concerning tax avoidance. This is an instance in which I believe it is right that legislation should be made retrospective. In general, retrospective legislation is not something that many of us would encourage, but in this case the kinds of schemes which the measure will be designed to scotch are quite clearly basically dishonest. Therefore, none of those who will be disadvantaged by it will have any real cause to complain.
It is right that the VAT level should be raised in the way that has been proposed. It is a bad tax. It is a spin-off from the Common Market and ought not to be there. That being so, the more people who can be cushioned against its operation, the better.
I think that we all welcome the fact that the Government have resisted the temptation to make an overall reduction in the rate of income tax rate from 34p and have confined themselves to selective measures. There has been a chorus of demands in the last few weeks for income tax to be cut across the board. I think that the measures taken to help people at the lower end of the scale, and the measures taken to benefit families, are wholly desirable. I also welcome the proposals concerning energy conservation. On the whole, although I am afraid that it is a Lib-Lab strategy and not a Socialist strategy, within that context it is a shrewd Budget. It is one with which the Leader of the Opposition had difficulty today. The right hon. and learned Member for Surrey, East (Sir G. Howe) will also have a great deal of difficulty with it tomorrow.

6.54 p.m.

Mr. David Knox: In common with most other hon. Members, I welcome the reductions in income tax which have


been announced this afternoon. The fact is that this country is grossly overtaxed and the burden of direct taxation is particularly heavy. The Chancellor has started on the way back to a more realistic and more sensible income tax system, but he has a very long way to go yet.
It is just as well to remind ourselves that to restore the country to the position which the Chancellor inherited in March 1974 he would have had to cut income tax by about £5,000 million. Today's reductions should be measured against that figure. Although I believe that it should be the aim of the Chancellor of the Exchequer to reach that position eventually, it will certainly take a few years to achieve and it would have been imprudent of him to go the whole way this afternoon.
I am not trying to justify what the Chancellor of the Exchequer has done today; I am pointing out that it will take a long time to undo the economic harm and damage that the Chancellor's previous tax policy has done to this country.
By any standard, the Chancellor's stewardship of the British economy over the last four years has left a great deal to be desired. Whichever set of statistics we look at, the record of the Government is very bad. In particular, their record on economic expansion is deplorable.
The time has now come to change course. The course of economic expansion seems to me to be the one that the Government ought to take up. They ought to take it up because in the long run it is the only way to deal with the problem of unemployment which afflicts this country today. It is also the only real

way to deal with investment, because we shall not get investment in industry in the future as long as there is spare capacity.
Any industrialist who can get out of his existing capital plant the goods that he can sell in the market will not spend money on investing in new plant and machinery. Therefore, in terms both of dealing with unemployment and getting more investment, we need expansion, and I think that the Budget will help a little in this respect.
The present is a particularly good time for getting this expansion. With North Sea oil we have a little leeway in terms of balance of payments for the next few years. The balance of payments problem has, of course, been a great constraint on economic expansion in Britain since the end of the war. North Sea oil will see us through for the next few years. We can afford to spend a little more on importing raw materials and, indeed, on importing, temporarily, some manufactured goods. We should take advantage of this opportunity and try to get expansion going and to build it up over the next few years. That would enable the country, in the long run, to have the very much higher standard of living that we all want and the very much better social and public services that we need.
The great weakness in the British economy is that we do not produce enough. It is not that public expenditure is too high or that consumption is too high. It is simply that we do not produce enough. I hope that the Budget will help to get economic expansion going once again.

Debate adjourned.—[Mr. Frank R. White.]

Debate to be resumed tomorrow.

SHEFFIELD GENERAL CEMETERY BILL

(By Order)

Order for Second Reading read.

Mr. Deputy Speaker (Sir Myer Galpern): The amendment has not been selected.

7.0 p.m.

Mr. Frank Hooley: I beg to move, That the Bill be now read a Second time.
The Sheffield General Cemetery covers an area of about 14 acres. Part of the ground is consecrated and part is not. It is situated about one mile from the centre of the city of Sheffield. It is also in the middle of a built-up area. It is derelict, overgrown, vandalised, used for dumping rubbish and is in a dangerous condition. Children play around in this area, but there are broken vaults and fallen gravestones. There have been accidents and there are likely to be more in the future unless something is done about this area. I want to dispel any illusions that any hon. Member may have that this is a well-kept country churchyard. It is an eyesore. It is a vandalised area. It is dangerous.
The purpose of the Bill is to transfer the ownership of the cemetery from the Sheffield General Cemetery Company Limited to Sheffield City Council. An Act of Parliament is required for this purpose, because the effect would be to extinguish burial rights and to cease the use of the land as a cemetery. I understand that an Act of Parliament is required for that purpose.
I want to make clear that the city council and the company jointly are promoting the Bill. It is not a takeover. It is not a question of the city council's exercising compulsory purchase powers, or anything like that. This is a joint exercise by the present owners and the city council. The fact is that the cemetery company does not have the resources to maintain the cemetery in a decent condition as we would expect in this day and age. For its part, the council is prepared to take it over, but it does not need it as a cemetery. There are already a dozen civic cemeteries in the city and there is no necessity to add to that number.
The number of interments in this cemetery has fallen to about half a dozen a year. It was running at about a dozen a year up to 1977, but fell to only six in 1977. Since there is still space for about 13,000 burial places, if the matter were left as it is we could go on for another 2,000 years with this rather unhappy situation.
The plans of the city council for this 14 acres of strategically situated ground are as follows. The eastern part of the cemetery will be landscaped as a public park. So far as possible, graves will be left undisturbed, although memorials will have to be removed and there will have to be a considerable amount of tidying up and change of layout. If human remains are disturbed they will, of course, have to be reburied properly as provided by the law.
The western part of the cemetery will be restored as a setting for certain listed buildings and will be laid out as an example of a Victorian cemetery. It is not intended that the character of this area should be totally changed. A portion of the existing ground will be retained as a historic example of the layout of a Victorian cemetery.
There are seven listed buildings altogether, including a gateway built in 1836. There is quite an impressive old chapel in grey granite, which was also built in 1836. There is a monument to Mark Firth, who was the founder of Firth College, which eventually became the university of Sheffield. There was a monument to James Montgomery, the famous hymn writer, but that was removed some time ago to the precincts of the cathedral, and there is no problem with that.
Part of the overgrown area of the cemetery—it is very badly overgrown—has become of ecological interest to some students in the university. The small animals and the vegetation apparently have some scientific interest. The city council is prepared to keep this small segment in its present state for the purpose of scientific study for those students who are interested in it.
The cemetery will be closed for burials. This has aroused some emotional concern by people whose relatives—perhaps parents or grandparents—are buried in the cemetery. I do not wish in any way to disparage or play down the feelings of those people. I can well understand that


those who, for generations, have had relatives buried in the cemetery would be very sad to see most of it used for a different purpose. But there is a petition relating to this matter and if the House is prepared to give the Bill a Second Reading it will no doubt be examined carefully in Committee in accordance with the procedures of the House. Possibly reassurance can be given to the people who are concerned that the rights of burial in this part of the city will no longer apply.
Alternative rights of burial elsewhere, without any charge, will be given to people who can establish a legal right for burial in this cemetery.

Mr. John H. Osborn: The problem relates to those who wish to join their next of kin—perhaps the widow of a husband or the widower of a spouse—who are buried in this cemetery. Does the hon. Gentleman visualise any assistance from the city council in that instance?

Mr. Hooley: I imagine that that could be considered. But clearly, if the purpose of the cemetery is changed and if the right of burial is extinguished, one could not physically bury persons in the same area as that in which previous generations were buried. That is part of the reason for the Act. Those rights could not be extinguished, except by an Act of Parliament. However, that is a matter which can be considered in Committee. I am sure that the petitioners will be given every opportunity to argue their case, to make representations and to make the kind of point which the hon. Gentleman has just made.
Basically the proposition is that the Bill will enable the city council to take over what is a vandalised, derelict burial ground—it could fairly be argued that in its present state it is more of an insult to generations gone by than a fair memorial to them—and to turn it into a fitting memorial combined with a much-needed space for recreation in an inner area of the city which very much needs it.
On general social grounds the case for doing that is very strong indeed. The fact is that the present company simply does not have the financial resources to manage and operate this cemetery in the way that it should be managed. I

believe that discussions were held 10 or more years ago about handing it over to the council, but they foundered on a technical legal problem. If the Bill is given a Second Reading we are now prepared to solve the legal problem through Act of Parliament and through the proper processes of this House.
I would not like to give the impression that this proposal is something peculiar and unprecedented. I am advised that the deconsecration of burial grounds has been implicit in a number of private Acts—the Rochdale Corporation Act 1962, the Leeds Corporation Act 1956, the Northampton Corporation Act 1958. The Hove Corporation Act of 1966 extinguished burial rights and the Manchester Corporation Acts of 1954, 1958 and 1965 converted cemeteries into open space or playing grounds within the city of Manchester. What is proposed here is not some wildly revolutionary idea; it is a procedure that has been exercised by important cities in the kingdom before, and I hope very much that it will be acceptable here.
One of the problems that have arisen is that some people are nervous or worried that, if the cemetery is taken over, it will be used not for a park or open space and for amenity purposes but as a site on which to put up buildings. To meet this fear, the city council is quite prepared to consider an amendment in Committee to prohibit for at least 25 years any building on this piece of land, other than a minor recreation building. In other words, until way into the twenty-first century there should be no possibility of anyone putting up an unsightly or inappropriate building on the land.
The council takes the view that beyond a 25-year span it would not be fair to their successors and to ratepayers, taxpayers and inhabitants of the area to lay down stringent conditions. After all, the cemetery was originally opened 140 years ago, in 1836. To extend the span of its use partly as a cemetery and partly as an open space into the twenty-first century would seem to be reasonable, but beyond that it would not seem to be reasonable to try to bind a future civic authority or the ratepayers in the area. They might very well conclude, even after 25 years, 50 years, or more, that the excellent lay-out and the creation of a public park in the area was so valuable that they


would not want to disturb it, anyway. But in legislative terms, as I say, the city council is prepared to accept an amendment providing for a 25-year span during which building development will not be allowed.
I understand that various ecclesiastical authorities and various denominations have been consulted about these plans and, to my knowledge, they have voiced no objection. Certainly no one has approached me. I have not read in the local Press of the Church of England or other denominations raising any objection to this proposition.
As I say, there is a petition by certain people who may feel that burial rights should be continued. That matter can be discussed in Committee. No one is suggesting that the personal and family feelings of people should be overridden. We have procedures in this House for discussing these matters, but in order for them to be discussed the Bill must be given a Second Reading.

7.12 p.m.

Mr. John Osborn: The Sheffield General Cemetery is, in fact, almost surrounded by the Hallam constituency. It borders on to the Heeley constituency and it is right, therefore, that the hon. Member for Sheffield, Heeley (Mr. Hooley) should sponsor the Bill on behalf of the Sheffield City Council. In fact, however, it rests in Sharrow, in part of the Park division, and I see that the right hon. Member for Sheffield, Park (Mr. Mulley) is present to listen to the debate.
The debate really takes place in a David and Goliath situation, because the Sheffield City Council is largely Socialist and those who are objecting appear mainly to have approached me as the only Conservative Member of Parliament in the area and the Conservative councillors.
I agree with the hon. Member for Heeley that the condition of the Sheffield General Cemetery has on several occasions in recent years been questioned in the city council and in the Press and that it has represented a danger, especially to children. The hon. Member has referred to this danger in his letters to objectors and to the Press. Much of the damage has been due to vandalism and to the fact that the cemetery has not been

supervised properly, certainly during the time that I have been a Member of Parliament.
I have been aware of the cemetery since I was a boy, and when I looked at it last autumn it was untidy and unkempt. However, this winter, as part of a job creation scheme, the cemetery has been tidied by arrangement with the city council. Last Saturday, when I walked through it with a number of the objectors, I was surprised to find it in such good condition. Trees have been cut down, grass has been cut and paths have been cleared. I am certain that the ratepayers and citizens welcome the decision of the city council to clean up the cemetery, and the outcome of its endeavours is a cause for congratulation. Certainly it is not right to describe the cemetery as desolate today, as described by the hon. Member for Heeley, if it was right to do so last autumn.
The handling of the cemetery issue by the city council, especially by its Socialist leaders over the last few months, has given me no option but to use the democratic safeguards of the House of Commons where the balance between the political parties—perhaps there is an element of politics in this—is a good deal more even than is the case on the Sheffield City Council. Hon. Members here may not be aware of it, but with the exception of one year the ruling party on the city council for almost 50 years has been the Labour Party, and both its councillors and perhaps the officers serving them may not be as sensitive to the views of the objectors on an issue as would be the case if the margin between the ruling party and the opposition were closer.
Many people have written to me and have approached the objectors, and I am certain that one who will attend my Select Committee which is set up following this debate has written to me saying:
In my own case I have two grandparents, two uncles, one aunt and my own parents in a small patch of graves which are close together. In fact my mother died in 1943 and my father in 1950. Every now and then I go to clean up the stones and graves and I should be very resentful if the graves were disturbed at this stage. The present plan to tidy up part of the cemetery is not objectionable to me"—
and many reasonable people have put this view to me—
but the wide powers in the Bill would allow the corporation to change its mind at short


notice and I have no faith in the present leaders' honesty.
I should like to touch on this approach to me and to elaborate on the reasons for this lack of faith. This view seems to be reflected by many who have approached me.
Another constituent approached me in connection with a letter which many of them received from the hon. Member for Heeley dealing with the hazards to children. The hon. Member said that the living should be considered before the dead. My constituent's reply is:
This is most unfair. We also are living and have suffered grievously since 2nd December 1977 when the announcement was coldly made in the local Press.
Many of the old petitioners have been deeply troubled, as is evidenced by their many letters. One point which has been put to me is as follows:
We wonder how people throughout the country would feel if their family graves were going to be treated like this. Mr. Hooley should be asked what would happen if this were to be done in the Flanders military cemeteries and was told that that was a different matter.

Mr. Hooley: If the Flanders military cemeteries had been left in this disgusting and derelict condition, the attitude to them would have been different, but they are not.

Mr. Osborn: They are not. That is the point. We do not dispute that this private cemetery has been short of funds and has been allowed to fall into decay.
At a special meeting on 2nd November, Councillor Pinder, who happens to be chairman of the Hallam Conservative Association, seconded by Councillor Patnick, chairman of the Conservative group on South Yorkshire County Council, moved the following amendment:
That action for the promotion of a Bill to authorise the acquisition of the Sheffield General Cemetery by the Council be deferred and the Policy Committee be requested to give further consideration to this matter with a view to the council acquiring the cemetery for use as a cemetery and an amenity area.
The request was rejected. Time and opportunity to reflect whether action for the best was being taken was rejected out of hand.
When I was asked to oppose this Bill, I was asked to reject it out of hand, and

hon. Members have been asked to come here to vote against it. But the hon. Member for Heeley put his case very carefully, and I think it right that this issue should go to a Select Committee. However, there are hon. Members who would be concerned if the findings of the Select Committee were not wise, and, of course, there would be an opportunity to vote against these proposals on Third Reading. I think it right that the Select Committee should look at this isssue.
The city council has made reports to Members of Parliament, and the hon. Member for Sheffield Heeley has outlined the background, although I find some contradiction in the information given to me. In 1962, a company called Bowden Development Ltd. acquired 980 out of 1,000 shares in the original cemetery company. Approaches were made to the former city council to secure the redevelopment of the cemetery by coverting part of the land into a peace garden and using the rest of the land for a block of flats. It could be said, perhaps, that the advice given to the company at the time was bad advice, but the proposal did not proceed because of local opposition from members of the public, particularly those with burial rights and a personal interest.
Subsequently, Bowden Development Ltd. has approached the present and former councils to ascertain whether the council would be prepared to take over the cemetery, or to what use the company could put it. Earlier last year, the company approached the city council saying that it was prepared to convey the cemetery and associated buildings to the council free of charge, subject to an existing free tenancy held by an employee of the company being maintained. The company said that if this proposal were not accepted it would have no choice but to put the cemetery company into voluntary liquidation.
Anyone can accept that this would put any city council in a position of having to take a decision. I have reason to believe from assurances given by officers of the city council and by the number of letters that have gone out to known-grave-holders that the necessary statutory obligations have been carried out by the legal department of the city council. Unfortunately, its rate of success in receiving replies to letters that have gone out has not been high, and there have been problems


because the records of the cemetery probably are out of date.
The acreage involved is some 17½ acres—although the hon. Member for Heeley said that it was 14 acres—with some 20,000 grave plots and 330 vaults. I understand that the interments so far total 77,834, and I confirm from one source that the number of interments has recently been about six a year.
The cemetery was incorporated under a Private Act of Parliament in 1846 which set aside part of the cemetery as consecrated land to be used for burial in accordance with Church of England rites and part of the cemetery as unconsecrated land to be used for interments of persons who were not members of the Church of England—mainly Nonconformists.
A useful introductory history to the cemetery has been prepared by a Mr. J. R. Welch and the fifth-year history group of Carter Lodge School, and he has supplied me with some additional information. He said that until recently there was an average of one burial a month but that no plots had been sold since 1955. This cemetery was started, and some of the buildings originally built, in 1836. There is no doubt that the cemetery was used as a prestige one and that it served a useful purpose until the turn of the century.
The Select Committee may be interested in establishing whether the acreage is 14 or 17½ and whether the number of interments has been 77,000 or 87,000. The Conservative councillors and the general public have felt that a decision to purchase the land and to pass the Bill was rushed too quickly, for reasons which the Conservative opposition could only guess at, after a delay going back to 1962 and 1964. There have been no opportunities for the Conservative opposition to ask questions about the minutes of the policy committee of the city council. That is why the public and the opposition were very uneasy at the action taken by the council in this case.
Many of the past leaders of industrial Sheffield, the steel masters, the cutlery masters and others, have been buried in the cemetery and many of them lived in the Hallam constituency. It has been inevitable that some of the great names, including Mark Firth and Cole, are buried in this cemetery. Among them were many

devout churchgoers of a variety of denominations.
The constituents, when doubting the honesty and purpose of the council, expressed their views to me because they believe that too many councillors from areas other than Hallam may be too insensitive to the religious sensitivities and traditions of those in the area of the cemetery. This may or may not be correct but these people feel that it is, and the objectors fall into two categories. The first is those who live nearby and who want to preserve the cemetery on environmental and other grounds.
The local environmental action groups and the local Conservative branches of the Hallam Conservative Association have tackled me about the importance of keeping this area of land as an open space near the city. It is close to one of Sheffield's most picturesque water mills, and the ornithological and wildlife is worth preserving. Above all, these people want this area as an open space but would not object to seeing an open space comparable to that across the valley known as the botanical gardens.
The second group of objectors have appointed their parliamentary agent—a Mr. Byron Wright, who is assisted by Mr. and Mrs. Fletcher and a Dr. Fletcher. These people have lodged their objections in the Private Bill Office and have held close consultations with their local councillors, as well as making their views known clearly to me.
I appreciate that several other local authorities have found it necessary to take over and develop cemeteries that have fallen into decay and disuse. However, I do not accept the haste with which the Sheffield City Council has approached this Bill. I find that burials are still taking place in the cemetery even at the rate of half a dozen a year, let alone one dozen, as has been the case recently. From correspondence that I have received from relatives of those interred in the cemetery recently, it appears that consultation between those who have burial rights and relations buried there and the city council before the preparation of the Bill was not effective.
This shock to which I have referred has been widespread ever since the intentions of the city council were made known


to the Press towards the end of last year. Powers given to local authorities where the political balance is much more even are no justification for similar powers being taken by the Sheffield City Council.
The hon. Member for Heeley, referred to the Sheffield amendment. There have been discussions between Councillor George Wilson, the Socialist leader on the council, and Councillor David Heslop, the Conservative leader, and myself about the question of building on the cemetery. The amendment was passed on 1st March, and it says:
That in the consideration of the Sheffield General Cemetery Bill by Parliament, the head of the administration and legal department be authorised to indicate that the city council is prepared to agree to the inclusion of an additional sub-clause in the Bill to provide that for a period of 25 years from the passing of the Act no part of the cemetery shall be used for the erection of any buildings other than for recreational purposes.
This heightens rather than relieves the concern of objectors. Any reference to building at this stage shows an utter insensitivity to those who have burial rights and have close relatives recently buried in this cemetery. If in the year 2005, after there have been no burials for 25 years, it is thought right by the next generation to build houses or flats, I would expect there to be a new Act of Parliament.
Manchester provides a precedent for this, without this being referred to in an Act of Parliament now, and I shall refer to this. There was a very good Press release issued by the city council setting out its intentions clearly. These were to restore the listed buildings in the cemetery, to leave certain areas of the cemetery undisturbed for ecological reasons, to restore the western end of the cemetery to its original Victorian form and to landscape the eastern part of the cemetery as a public park by removing the memorials but as far as possible to leave the actual graves undisturbed. All Conservatives would go along with this, and some of the objectors—namely, those objecting on environmental grounds—would agree with it, but others would not. Once the Bill had been drafted, it became perfectly clear to them that the powers in the Bill as it stands give the city council far greater powers than those required to carry out the proposals.
I accept that a Private Act of Parliament is necessary to extinguish private rights of burial on this land and to enable the city council to use the land other than as a cemetery. I do not accept the way in which the Bill, if passed, would give the Sheffield City Council totally unrestricted powers to deal with this land as it wishes.
The hon. Member for Heeley made references to other Bills. This is perhaps because those who have an interest in this cemetery do not trust the city council as constituted. The thought of having close relatives disturbed and memorials removed has greatly added to this distress. The parliamentary agents and promoters have consulted local Members of Parliament. From my own researches and the help I have had from the House of Commons Library, it seems that other local authorities have been able to promote Bills of this type. This Bill is undoubtedly based on precedents. Therefore, I am aware that the claims of some of the objectors who have approached me may not be as well justified as they would consider them to be. I do not know the exact answer. I very much hope that the Select Committee will find the exact answer for them.
A perusal of, for instance, the Greater London Council (General Powers) Act 1975 shows that Southwark was able to use Camberwell Cemetery land and the Nunhead All Saints Cemetery, but Section 13 of the Act restricts the use of such land to open space for use as either a nature reserve or for gymnasia or for club houses for societies having athletic, social or educational objects. It will be useful to know whether the cemetery was still being used when the Bill was introduced.
There is the Queen Road, Brighton Burial Act 1975. That concerns a privately owned cemetery which had not been used as a burial ground since 1854. Clause 4 of that Act was similar to Clause 6(1) of the Sheffield Bill. However, all burials in that place had ceased for 124 years, so building took place a long time after the last burial.
The Hove Corporation Act 1966 provided an interesting precedent. Burials were wholly discontinued in St. Andrew's Churchyard in 1956. There was provision for part of the land to be conveyed to the city council, which built a


school on it. In 1972, in order to build on the land, further provisions were made in a Bill of that year, 1972.
Then there is the Liverpool Corpora-Jon Act, which again provided powers for cemeteries to be taken over. The Manchester Corporation Act of 1970, Section 22 of which empowers the corporation to use, deal or dispose of burial grounds as if they were never consecrated, is yet another Act.
Therefore, powers have been taken in the past, and I am aware that in opposing this Bill I shall have to proceed slowly. It seems reasonable to use these old disused grounds, but, frankly, as a Back Bencher, I have not yet sufficient knowledge of the circumstances in which each of those Acts was passed and how old the burial grounds were.
I might even refer to the Leeds Bill of 1956, or the Rochdale Bill which has been mentioned. In 1975 there was a cemetery at Newton Heath, Manchester, at which burials had ceased as recently as 1950, prior to which about one burial a month had occurred. The Act gave powers to the playing of games on school playing fields.
Obviously, it must be the local authorities which determine their own cemetery needs over and above those of parish churches in the region. There is an increasing tendency for citizens to welcome and accept cremation. I understand that the city of Sheffield—the hon. Member for Heeley referred to this—has more space for burial purposes than it is likely to need for decades to come.
I wrote to the Under-Secretary for the Environment in February trying to find out which local authorities had purchased and closed cemeteries which had not been used for a considerable period and which local authorities had purchased and closed cemeteries which were still taking burials, the nature of guidance given to local authorities and the number of grave sites expressed per capita of living population in the major cities. I asked Parliamentary Questions. I did not get very helpful answers. I hope that the Select Committee will look at the Questions and try to find more helpful answers.
I received a very full reply from the Under-Secretary of State, who stated that

he had not authority on the points of law involved and that, in any event, it was for the promoters to satisfy Parliament of the need for a Bill. At least, I have brought the Bill to debate on the Floor of the House of Commons and I am on my feet now. The Under-Secretary's letter states:
Where a council can acquire an interest in burial ground land by agreement, the Open Space Act 1906 enables operations within certain limits to be carried out for the purposes laid down in that Act. In some circumstances a council acting on these provisions may incur a liability to pay compensation. The Town and Country Planning Act 1971 contains powers to acquire land and where burial ground land has been compulsorily acquired. Section 128 provides for its use in accordance with planning permission. These enactments include provisions for the way in which consecrated land should be treated.
Therefore, I hope that the Select Committee will advise Sheffield what precedents there are outside Private Bills.
The letter continues:
Section 128 of the 1971 Act is also relevant regarding building on disused burial grounds. That provision creates exceptions to a provision in Section 3 of the Disused Burial Gounds Act 1884 which itself, with limited exceptions, prohibits building on such land. Subject to that, it is not easy to generalise about the time which should elapse before building is undertaken on former burial grounds; but you may like to know that Section 32 of a pastoral measure of 1968, in which an exception was also made to Section 3 of the 1884 Act, provides for a period of 50 years between the date of the last burial and putting church land to other use.
In view of the fact that it has been easier to close cemeteries where there have been no recent burials than where there have been recent burials, some local authorities at first closed local cemeteries under one enactment and then passed an Act at a later date when perhaps memories were weaker. For instance, the precedent in Manchester in the case of the Act dealing with Newton Heath, Rusholme and Nunhead in 1950.
The specific powers to develop in those cases were not given until 1954, 1958 and 1965. These are precedents which should have been looked at by the Sheffield City Council. If the cemetery were to be closed now, time should elapse before any removal of memorials or disinterment took place. The difficulty is that this city council has apparently shown too little sensitivity to the needs of objectors.
I should like to see safeguards inserted into the Bill to prevent any immediate or hasty reorganisation of the cemetery. Those who have an interest in the cemetery would be prepared to see it retained as a place of quiet enjoyment—at least, some of them would—or what has been described by the city council as passive recreation similar to the botanical gardens. This is next to the home of one of my great grandparents and is one of the gardens that I visited as a child.
One of the amendments that I should like the Select Committee to consider is that the preamble should be altered to bring the intention of the Bill into line with the Press release issued by the city council. This would enable the council to provide a park or recreation area upon the cemetery site. I hope that it will delete Clause 4(1) dealing with deconsecration. Thirdly, it should restrict the powers at present given by Clause 6 to provide that the cemetery should be used only as a park or garden for passive recreation. Finally, I should like the Bill to come into force two years from now or well after it has received Royal Assent. This would give time to those affected to make alternative plans. After all, it is time for which people are asking.
I have discussed the timing in a letter to Councillor David Heslop outlining what I thought opponents to the Bill would like to see, and I hoped that he would discuss these matters with the city council.
I have discussed this matter of timing with those who have burial rights. Their general feeling is that nothing should be done and that it should be cleared up as a cemetery and kept as such, but I cannot go along with that and they know it. I believe that Parliament should take the burden from one Member of Parliament in this case because it is wrong that ratepayers' money should be used to benefit so few. On the other hand, one or two people have asked me why the dependants of those who are buried there cannot themselves keep the cemetery in good condition. I do not want to overstress this matter because it is a problem that faces authorities in respect of graveyards in all our churchyards, but I hold the view, as the promoters said in their Press release, that this cemetery should

be a park and should be changed gradually.
I have discussed a date when work should commence. I do not think I should like to see work commenced for another seven years. I have set out my views in the letter to Councillor David Heslop. But one matter that causes concern is what provision, if any, after the passing of the legislation will be made for those who have close relatives buried in the cemetery and who when they die wish to join those deceased relatives. I do not think that the hon. Member for Heeley understood me. The only way this will be possible is to disinter the existing graves and to let those already buried there join their deceased relatives elsewhere. The cost of doing this would not fall within any of the provisions of the Bill and presumably would have to come from persons concerned or from private sources.
It is possible that certain widows will wish to be buried alongside their husbands and widowers alongside their spouses. Is it common practice when a cemetery is closed to arrange such a matter, and what provisions have been made by other local authorities?
There have been precedents where graveyards have had to be disturbed for planning purposes—including, for example, a roundabout near St. Mary's Church, less than a mile away from this cemetery. I have consulted the Sheffield Council of Churches, and it feels that something needs to be done about this environmental area of Sheffield. But it is concerned that recent interments to the cemetery should not be disturbed, and I have been asked to stress this point in my opposition to the Bill.
I have been in touch with the Church of England, including the Right Reverend Gordon Fallows, Bishop of Sheffield, and because the Church of England has its own problems with its own graveyards I have been advised from various sources to object with caution. This makes it clear that there is a much bigger problem at hand. I do not think it is right that the city council should face this burden without the issues being more widely debated. I mentioned the pastoral measure of 1968 from which the implication is that, wherever possible, the graves should not be disturbed for at least 50 years after a burial.
I have objected to the Bill first because those who wish to be consulted feel that they have not been consulted and have turned to Parliament to consider their views—views which appear to have been brushed aside by the city council. Secondly, I am objecting to it because it would be of value for a Select Committee to examine the problem facing Sheffield and to relate it to problems in other areas in a much wider context. I very much hope that the Select Committee will undertake that task. Thirdly, I object because the present city council has not had to face up to the opposition which it would have faced if the margin between the ruling party and the opposition parties was not so great.
The Star, on Friday 7th April, in an item headed "Sheffield's forgotten burial ground", reported:
Councillor Jack Watson, who used to live in the area, said 'At the present time the scrapyard is ten yards away from a grave that was used recently'. City council leader Councillor George Wilson intends to stop any building development near the graveyard. He said 'It is diabolical, more respect should be shown to the people lying there.'
I wish that he had said that more specifically in the city council to give assurance to the objectors to this Cemetery Bill.
Furthermore, the Sharrow newsletter of the branch Labour Party contains the following statement:
Sheffield District Council want to acquire the cemetery so that it can be improved from its present dangerous and terrible state for recreational purposes. A Bill has been going through Parliament which would enable the council to do just that. The only problem is that the Bill is being sabotaged by the Tories … It is worth remembering that there were no objections from the Tories when the cemetery was purchased by a development company … So remember—the Tories of Hallam are preventing you from having your recreation space, not theirs!
I hope that Labour Members will either condone or refute that statement, because it has caused more concern in the neigh-bourhood than has any other document emanating from the Labour Party and claiming to represent the views of Labour councillors.
Unfortunately, there has been misunderstanding on this issue. It has become political. Therefore, the objectors have turned to me, the only Conservative Member of Parliament in the area, to see that Parliament looks at this issue and gives it a proper hearing.

7.47 p.m.

Mr. Martin Flannery: It is most unfortunate that the hon. Member for Sheffield, Hallam (Mr. Osborn) is opposing this sensible and compassionate Bill. He likened the situation to that of David fighting Goliath. I do not see the Sheffield City Council as Goliath. I remind the hon. Gentleman that Goliath in his day was seriously in the wrong, but a Labour Sheffield City Council has been elected and re-elected for 50 years. I was sorry that the hon. Gentleman impugned the integrity of that council. The people of Sheffield have elected that council because it has shown so much concern for them and has shown compassion in general over that period.
I have a particular interest in this matter, not merely as a citizen of Sheffield. I was born in Sheffield, in my own constituency, but for nearly 20 years I taught in the area in which the cemetery is situated. For 11 of those years my classroom overlooked the cemetery, which was alive with rats. When I arrived in the area in 1953, a child was badly injured and lay out in the open all one afternoon. Almost every morning at assembly we would warn the children to steer clear of this dangerous and wildly overrun cemetery. I emphasise that that occurred as long ago as 1953. It was so dreadfully overrun and so wild that not only was it an eyesore; it gave rise to a sense of shame.
It was a privately owned cemetery run by a company, and 10 years ago there were only 12 interments a year in it—a figure which now, I understand, has dropped to six. The people concerned cannot go on any longer, because money is needed to run the cemetery. Therefore, the council has examined the cemetery which is near to the main part of Sheffield, only a few hundred yards from one of the main streets.
The hon. Gentleman spoke of all this having happened in haste. I remind him that the place was in a dreadful state as far back as 1953. Therefore, the word "haste" is very much out of place. I am only sad that it has taken so long to get round to taking some action. The council has got round to it at the request of the company and the local people.
This area of the city has a vast amount of Industrial Revolution-type slum housing. I know the names of all the streets where the back-to-back houses have been


cleared away by the council. There is a plan for the whole area, and the cemetery is in the middle of it.
Many of us are deeply interested in the cemetery. I am president of the Sheffield Holberry Society. Samuel Holberry was a great and distinguished Chartist. He is buried in the cemetery. For compassionate, as well as political reasons, I wanted a memorial erected to him. He had possibly the biggest funeral that Sheffield has ever seen. We would not dream of upsetting local people in a way that was insensitive or not compassionate.
Every detail of the Bill has been gone over to try to help people in a humane way. Every clause has been carefully thought out. There is the provision, for example, about 25 years having to pass after the last burial. The area would have to be cleared up in an acceptable way after taking account of the views of people who have had dear ones buried there in the last few years. All this has been carefully thought out, and I should have thought that, outside a tiny minority, everyone would want the Bill to go through without opposition.
The hon. Member for Hallam said that the matter had become politicised,

but it is not the Labour Party which has done that. I was here when the hon. Gentleman was away in Europe and persuaded some of his hon. Friends, who had never heard of the cemetery, to object to the Bill. That was politicising.
We thought that such a sensible measure would have gone through with the agreement of everyone concerned. It is said that it is being opposed in this way. I have spoken to the leaders of the council and sounded out local people. I believe that it is the general will that the Bill should go ahead in order to make a better Sheffield, to do what local people want done, to provide an attractive area and for it to be looked after. It will not injure any human being.

Mr. John H. Osborn: I should like the hon. Gentleman to understand that I shall give the Bill a Second Reading. I do not intend to vote against the Second Reading.

Mr. Flannery: I am happy to accept what the hon. Gentleman says. That newfound happiness is a good point at which to end.

Question put and agreed to.

Bill accordingly read a Second time and committed.

EUROPEAN COMMUNITY (TEXTILE POLICY)

7.53 p.m.

The Under-Secretary of State for Trade (Mr. Michael Meacher): I beg to move,
That this House takes note of Community Documents Nos. S/139/77, S/183/78, R/3375/77 and R/513/78 (and the Supplementary Memorandum submitted on 21st March 1978) on Community Textile Policy.
I am glad that we have an opportunity today to consider these documents which, together, establish the framework for trade in textile products over the next five years. They all arise from the multifibre negotiations which took place at the end of last year, and may be regarded as the practical outcome of those negotiations.
When hon. Members last debated textile policy during the debate on the Consolidated Fund Bill on 14th December, the EEC had not taken its final decision about renewal of the MFA. That decision was taken by the EEC Council of Ministers a few days later, on the 20th, when Ministers decided to accept the results of the negotiations and agreed that the Community should renew the MFA. In taking this decision, they agreed to some increase in the ceilings set in the negotiating mandate for cotton yarn and cloth in order to reach agreement with certain countries. To have done otherwise would have put at risk the whole package of negotiations. But before going along with that decision, we secured a useful reduction in the United Kingdom share of the cotton cloth increase, together with other important assurances from the Commission, which I shall come back to in a moment.
The decision to accept the new bilateral agreements was described by my right hon. Friend as a "historic turning point" in the fortunes of the United Kingdom textile and clothing industries. For the first time, we and our trading partners in textiles know where we stand for the next five years. And within this overall framework there are new rules to control the flow of imports which are an enormous improvement over anything that we have had in the past.
In the first place, there are many more bilateral agreements or other special arrangements with low-cost suppliers—28 to date, compared with only 14 previously.

The coverage of these new arrangements will be much more comprehensive than in the past. In 1977, about 75 per cent. of our low-cost imports were covered by quotas. The new arrangements cover, either by quotas or by special safeguard provisions, about 95 per cent. of our low-cost imports.

Mr. John Roper: Can my hon. Friend say how much of the remaining 5 per cent. is with State trading companies and therefore also covered in some way?

Mr. Meacher: My hon. Friend must have read my speech, because that point is covered in the next sentence. If we include the separate quotas that operate outside the MFA or the State trading countries, the coverage rises to 98 per cent. The arrangements with State trading countries account for a further 3 per cent. of the remaining 5 per cent. Virtually all of the United Kingdom's low-cost imports of textiles and clothing are subject to actual or potential control.
We have paid particular attention to the most sensitive products. These are a familiar list for hon. Members—cotton yarn, cotton cloth, synthetic cloth, knitted shirts, jumpers, trousers, woven blouses and woven shirts—and are all products where import penetration is high. All low-cost imports of these eight products are now restricted within global ceilings, both for the EEC as a whole and for each member State. The effect of these ceilings should be that import penetration will be virtually stabilised, because imports from new suppliers will have to be contained within the overall limits. This is a significant departure for the EEC and, because these eight products represent about 60 per cent. of our total low-cost imports, this should be of great benefit to our own industry.
In general, the quotas are based on actual trade in 1976. Trade in 1977 was, in some cases, lower than in 1976, and I know that some hon. Members are therefore concerned about the level of the 1978 quotas. I understand that concern, but I insist that there was no alternative to using the 1976 base line.
As negotiations took place during the latter half of last year, 1976 was the latest year for which complete EEC statistics were available. The 1977 statistics were not available until the beginning of


April this year. To have chosen a base year before 1976 would have been contrary to the spirit of the MFA and on practical grounds it would not have been possible to justify using different base periods for different products or suppliers.
Documents S/139/77 and S/183/78 set out the quota levels for the member States for 1978. In the case of Taiwan, the quota levels for 1978 to 1982 are shown. Both documents were approved by the Council of Ministers on 7th February and both have now been published in the Official Journal. Our own notice to importers will be published in Trade and Industry on 14th April. I should also say that in the case of the regulation covering Taiwan—this is a more technical matter—where no negotiations took place because Taiwan is not a GATT signatory, the Taiwanese authorities have made representations to the Commission about the low level of some of the quotas. If any changes are proposed as a result of these representations, the Select Committee on European Secondary Legislation will, of course, have an opportunity to consider them.

Mr. Dan Jones: I completely agree with my hon. Friend that the new regulations are a valuable safeguard However, what steps have been taken to ensure that the safeguards are ironed out securely for the textile industry in future?

Mr. Meacher: My hon. Friend raises a key point. It is all very well to have a set of regulations, but we must be concerned about efficiency in implementing them and the prevention of loopholes and possible abuse. I assure my hon. Friend that later I shall turn to the whole issue of surveillance, the blocking of loopholes and the prevention of potential abuse. When I reach that stage in my speech, he will understand that the arrangements are extremely comprehensive.

Mr. J. Enoch Powell: Is this one of the cases where approval was given to EEC documents by the Council of Ministers before instead of after the documents had been debated in the House?

Mr. Meacher: This is one of the cases where the decision is taken by the Council of Ministers because it is felt to be in the interests of each of the member

States that action should be taken as soon as possible. However, the Select Committee on European Secondary Legislation will have a full opportunity to examine the matter. As we are talking about the imposition of levels of quota that will benefit a particular industry, the urgency of the matter is sometimes overriding. This is not the first time that it has happened, but I do not believe that it has caused matters to be taken amiss by the Select Committee. It has an opportunity to make representations if it takes that view.

Mr. Roper: My recollection is that this is an instrument that the Scrutiny Committee did not recommend for debate in the House before the decision was taken. It merely recommended that it should be debated at some stage in the context of a debate on textiles.

Mr. Meacher: I am grateful to my hon. Friend for giving the House that information. This is quite regular practice, as I have indicated, in the circumstances that I have outlined. It is not that there is any attempt by the Government in any way by sleight of hand to put through a measure before there is a proper opportunity to discuss it. When it is beneficial to the home industry for action to be taken more quickly, that is the procedure that has been followed. That is well understood by the Select Committee.
With one or two exceptions, the quotas are now all subject to dual control—that is, that an import licence is granted here only on production of a valid export licence issued by the supplying country. The exceptions are Taiwan, where the quotas continue to be import-administered: Malaysia and the Philippines, where export-administration will begin on 1st May; and Peru and Mexico, where export administration will begin on 1st July.
Another very important advantage in the new agreement is the introduction of more precise safeguard procedures which cover all products from bilateral agreement countries which are not subject to immediate quotas. These procedures are most often described as a "trigger mechanism", under which new quotas can be introduced following consultation if imports of unrestricted products reach certain specified levels compared with


imports into the EEC in the previous calendar year. That is one of the most important aspects of the new agreement.
I mentioned earlier the assurances that we secured from the Council on 20th December. One was that similar procedures would be applied to countries which have not concluded bilateral agreements. This is an assurance to which we attach great importance because the ability to introduce quotas when imports rise above a certain level, whether or not the country concerned has entered into a bilateral agreement, is clearly a crucial element in the new framework, and clearly in respect of new suppliers. I know that that is a matter of great concern to the industry and to Members on both sides of the House. Therefore, I shall spell it out briefly.
As a result of their preferential relationship with the EEC, none of the Mediterranean suppliers was prepared to enter into separate textile agreements, with the exception of Egypt. Instead, the Commission secured a series of informal understandings. That is a word that is used in the technical sense. It is, perhaps, a term of art within the trade. In the case of Morocco and Tunisia, the Governments of those countries have agreed to a voluntary restraint on their exports of certain sensitive products. Similar arrangements have been agreed with the textile and clothing industries in Greece and Turkey. Discussions are continuing with Spain and Portugal in the hope that similar arrangements can be agreed with them. In the meantime, both countries have been notified of levels which should not be exceeded and have been warned of possible safeguard action. All these arrangements apply in the first instance to 1978, but the Commission intends to make similar arrangements in subsequent years.

Mr. Mike Noble: My hon. Friend said that the Commission intends to make similar arrangements in subsequent years. Will he confirm that the arrangements will mean no increase in quota levels for these countries in subsequent years, and will not merely imply the creation of further informal understandings, albeit at a different level?

Mr. Meacher: The proposal is that the basis on which existing informal understandings are made shall be continned,

although this is no doubt dependent on future negotiations. There will be the same basis for limitation as exists in 1978. The basis of restriction will remain the same. There is no suggestion that there will be an increase in future years, although, as I repeat, that is a matter for negotiation. The fact that it is not written into the specific framework of the MFA means that it is open to negotiation. The Commission has made it clear that it is not allowing non-signatory countries any easier conditions than those that apply to countries that sign the bilateral agreements.

Mr. Nicholas Winterton: What if the situation were changed and, for example, two of the four countries became signatories to the Treaty of Rome? What protection would the British textile industry have within that changed circumstance?

Mr. Meacher: If the hon. Gentleman is referring to Greece, Spain and Portugal, these are all countries where membership is being contemplated and arrangements are being made to that end. If they became members of the EEC they would have to abide by the same rules that govern existing member States, especially in terms of the abolition of quotas or tariffs and any special aids that they might now give to their industries. Such measures would have to be done away with as a result of the competition rules under the Treaty of Rome. That would certainly make a good deal of difference in terms of intra-Community trade in respect of those countries. We are talking about a situation well into the middle or late 1980s. If accession were to come about for those countries in the 1980s, there would be a transitional period, as there was for Britain, so we are talking of a period five, eight or 10 years on.
I was saying that because of the voluntary nature of these arrangements we have not published details in a notice to importers. However, I assure the House that a close watch is being kept on the level of imports from these Mediterranean suppliers, so that the Commission can be alerted in good time if the agreed levels are threatened. The Commission, for its part, gave an undertaking at the Council on 20th December that appropriate action would be taken promptly if it became necessary. That is an assurance to


which we attach great importance and certainly intend to utilise if need be.
This brings me to the question of surveillance and the intervention by my hon. Friend the Member for Burnley (Mr. Jones). This is obviously a key factor in ensuring that the safeguards are operated satisfactorily. We shall need to know in advance when trigger levels are likely to be reached so that the safeguard machinery can be set in motion in Brussels.
To this end, our own surveillance licensing of non-restricted textiles is being brought into line with the new MFA product categories, and we plan to introduce an early warning system which will give us time to act. At the same time, a Community-wide surveillance system based on early information about actual imports is being set up which should help to draw the net still tighter.
This surveillance will be based on new nroduct categories which are common to all the agreements and other arrangements. These new categories—no fewer than 123 in all—are much more precise than the 60 categories which applied in the past. This will greatly reduce the amount of flexibility between quotas—that is the transfer of unused portions in the one quota to increase trade in another which has been fully used up—and it should also reduce considerably the scope for evasion. I hope that my hon. Friend is satisfied with what I think is a comprehensive answer to his question in terms of the new arrangements.

Mr. Max Madden: Is my hon. Friend satisfied with the disparity that seems to exist within the Common Market between the delays that occur in submitting import data? I understand that it is 16 days for the United Kingdom, which is the quickest country, and goes up to 10 weeks for Italy. Can my hon. Friend foresee any standardisation in these arrangements to ensure that import information is passed much more quickly than appears to be the case today?

Mr. Meacher: We certainly intend to be as efficient as possible in passing this information to the Commission. One of the problems in textiles has always been the great delays in the information pipeline. As I indicated, we did not get the full figures for 1977 import levels until

the beginning of April. There are considerable delays in getting information quickly. I think that the United Kingdom is rather better than other countries in this respect. Subject to our capacity to collect that information more quickly, we certainly intend to process it and to pass it to the Commission as quickly as we can. If my hon. Friend is aware of unreasonable delays in that respect, I hope that he will let us know.

Mr. Dan Jones: The Minister asked me whether I was satisfied with regard to the Mediterranean relationship. Frankly, I am not. I think that the agreement with the EEC is remarkable and must, if left to that device, be of immense good for the textile industry. But if the Mediterranean countries are allowed freedom, I believe that that could undermine that good effect. Are we prepared to take steps now to bring under control, in the same way as the EEC has done with other countries, the situation concerning the Mediterranean countries, or, put another way, is the EEC prepared to allow them to participate in the control of the Mediterranean countries?

Mr. Meacher: There are preferential agreements with the Mediterranean suppliers. That is the different relationship that they have with the EEC. I am not convinced that, because of that special relationship, the Mediterranean suppliers will be able to increase their exports beyond what is permitted to the normal bilateral signatories. In effect, we are concerned about the level of imports, particularly of cotton yarn and cloth, from a number of the Mediterranean suppliers. We have given this information to the Commission. I understand that it is at present carrying out consultations with the supplying countries. That is a term of art. It means that the Commission is making it very clear that it does not expect these levels to be exceeded. In certain Mediterranean supply agreements—for example, with Turkey—there are safeguard clauses which we can invoke if need be. We are examining ways in which we can close that gap in relation to other countries where there are not such safeguard clauses.
Another important element of the revised MFA—this is the last point that I want to make—is the introduction—

Mr. Nicholas Winterton: Is the hon. Gentleman leaving the question of surveillance?

Mr. Meacher: I am leaving surveillance. Does the hon. Gentleman wish to make a further point?

Mr. Winterton: Is the Minister aware that the figures quoted by his hon. Friend the Member for Sowerby (Mr. Madden) were based on a paper recently issued by Comitextil? If there is this tremendous disparity in the notification of this import data—for the United Kingdom 16 days, but for the Netherlands and Italy anything between six, eight and 10 weeks—how can Europe in the present situation efficiently implement a surveillance system and procedure? Will he look at this matter rather more seriously and perhaps take to a European table the fact that we in this House are dissatisfied with the length of time that it takes some of our European partners to supply the import data which is so vital to an efficient and effective implementation of a surveillance procedure?

Mr. Meacher: I agree about the importance of making sure that information is made available so that action can follow. If this is a paper by Comitextil, the remedy lies in its hands. These are the textile manufacturers of the EEC. If they stand to gain from processing this information quickly to the Commission, it is up to them to ensure that their Governments act quickly. I suggest that they put more pressure on their Governments. Certainly the United Kingdom Government cannot require or induce the Netherlands or Italian Governments to operate more quickly. We can indicate by our own example that it can be done by us in a shorter time than by them. I hope that the industries in those countries will put a lot of pressure on their Governments to act more quickly. It is mainly for them to do that.
Another important element of the revised MFA is the introduction of more precise rules of origin and of measures that will require documentary proof of origin to be produced at the lime of importation in respect of imports from all non-EEC countries. These provisions are the subject of the other documents on the Order Paper, R/3375/77 and

R/513/78. Essentially, and at some risk of over-simplification, the former document sets out the new provisions and the latter modifies those relating to proof of origin.
The amended proof of origin provisions have been published in the Official Journal as Council regulation 616/78 and will come into effect on 1st May. It may help the House if I explain that the rules of origin determine the country of origin of a product. The proof of origin is the documentary statement of that origin which is presented to Customs. The combined effect, with some differences in detail between restricted and non-restricted sources of supply, will be that documentary proof of origin will need to be supplied by the exporter and produced by the importer at the time of importation in respect of all commercial imports of textile products of categories covered by the bilateral MFA agreements.
This is a very important point. Without rules of origin it would be possible, for example, for a country with a product under quota to evade the quota ceiling by shipping goods through a country where the same product was not subject to any restriction. The present origin rules lack precision and are open to differing interpretations. This will be avoided by the introduction of precise rules based on the concept that the origin of all textile products will be determined—with certain minor exceptions—by the carrying out of one complete process. For some products, the present origin criteria will be changed. The new rules will also apply to trade within the Community to determine whether goods traded between member States are of EEC origin and thus free from restriction, or of third country origin and thus susceptible in certain circumstances to restriction under Article 115 of the Treaty of Rome.
This is a complex subject. I have not attempted to give more than the barest outline of the purpose of the new regulations and how they will work. But we are satisfied that the combined effect of the revised origin rules will be to close the loopholes, to resolve the ambiguities in the existing rules and to ensure that the intentions of the MFA cannot be evaded by manipulation of the country of origin. If we have succeeded, as I think we have, that is an important point.
The documents that are the subject of todays motion are the outcome of a years' hard bargaining and negotiating both within the EEC and outside it. They are proof of the Government's determination to remedy the defects of the old MFA agreements and to provide our textile industry with adequate protection. As I have already said, there are now agreements or other special arrangements with 28 low-cost suppliers. These agreements provide for over 400 separate quotas, covering 123 separate product categories. These quotas, together with the new safeguard provisions, mean that about 95 per cent. of our low-cost imports of textiles are now under control. If the separate arrangements for State-trading countries are added, this brings the coverage up to 98 per cent.
It is perhaps too early, after only three months' experience of arrangements that will last for five years in most cases, to come to any final judgment. I would not wish to claim that the results are perfect; I am sure that they are not. This is clearly no time to become complacent or to relax our efforts. On the contrary, vigilance must and will continue.
I again pay tribute to the determination and dedication of members of the textile lobby on both sides of the House who provided the Government with the determination that was needed for these negotiations. But I urge the industry to take advantage of the new arrangements and the valuable breathing space that they provide.
We have done all that we could to secure our objectives of adequate protection against disruptive imports and security and protection for those who work in our textile industry. I think that they, and we, must look now towards the textile employers to do their bit and start expanding and investing for the future, so that if demand picks up—as I hope it will—it will be British manufacturers who have the capacity to fill the gap. Much will obviously depend on the general economic climate about which my right hon. Friend has spoken so encouragingly this afternoon. But the Government have recognised the special difficulties facing the textile industry and have taken unprecedented steps to provide help. I have not mentioned the many other areas in which help is provided, such as Industry

Act assistance, TES and other aspects, as these are mainly matters for my hon. Friend who will wind up this debate.
We have done our best to meet the objectives that we set ourselves in February last year. The documents before the House show our concern for the textile industry and those who work in it. We now look to the industry for a positive and determined response.

8.25 p.m.

Mr. Cecil Parkinson: First, I apologise to the Minister for missing the first moment or two of his speech. My own early warning and surveillance system failed me. I apologise for missing his opening remarks.
This is the first textile debate in which I have participated, but among my earliest memories is growing up in Lancashire and walking to school past textile mill after textile mill, most of which are now closed. I have had a continuing interest in the industry for a long time.
The background to the debate is well known to hon. Members. On 21st February last year, we had a debate on the state of the textile industry and in particular on the need to renegotiate the then existing Multi-Fibre Arrangement. That debate was marked by the bipartisan approach to the problems in the textile industry and the virtually unanimous agreement in all parts of the House that the Multi-Fibre Arrangement had to be renegotiated. With the full backing of the House, the Secretary of State for Trade went to the many meetings of the Council of Ministers pledged to improve and tighten up the existing arrangements. To give credit where it is due, the final agreement which we are now debating owes a great deal to the Secretary of State's determination and toughness. We pay him tribute for that.
I am sure that the right hon. Gentleman would be the first to admit that he was able to take such a firm line because he knew that he had the support not only of his own side but of the Opposition. He knew that he had the backing of a united House of Commons when entering the negotiations.
This is our first opportunity of discussing the long-awaited outcome of the renegotiations, which was finally announced in a characteristically anti-climatic fashion by a Written Answer


in the House of Commons and by the issue of the series of documents that we are now debating. Only the EEC would choose to make such an important announcement about such an important arrangement in a series of complicated and convoluted documents. I am told that it is possible, if one reads and rereads the documents, to understand them completely. I certainly found them extremely hard work.
The satisfactory conclusion of the negotiations was an event of major importance. The impact of them will have a decided effect over the next four years on the livelihoods of many of the 830,000 people who work in the clothing and textile industries in the United Kingdom. The documents represent the conclusion of an important series of negotiations. I hope to explain why the outcome of the negotiations is satisfactory.
There are those who would argue, as John Madeley did in The Guardian of 8th February, that the increased clamour for protection by Britain against imports from developing countries appears to be out of all proportion to the damage that those imports cause to the British economy. Mr. Madeley put forward a detailed argument explaining why he holds that view. His argument, however, seemed to ignore the fact that, even after the renegotiations, the United Kingdom and EEC markets will remain more open to the exports of developing countries than any other comparable market—if there is a comparable market.
The Conservative attitude to the whole question of trade with the developing countries—and it is an extremely difficult question—was set out in a recent speech by my hon. Friend the Member for St. Ives (Mr. Nott). He was talking about the principle of the Multi-Fibre Arrangement and the idea of introducing orderly marketing of the exports of developing countries in the markets of developed countries. He said:
In ths way"—
meaning via arrangements such as the Multi-Fibre Arrangement—
it is to be hoped that the developing countries can develop their infant industries without destroying the infrastructure of those industries in the developed countries. Developing countries must takes a realistic view of the rate at which imports can be absorbed where they compete, as they tend to, with traditional and

highly labour-intensive industries in the developed countries.
He might have added that when there is a fast-developing textile capacity all over the world and a world recession, as there is, the problems become even more acute.
This, then, was the basic aim of the renegotiations—to retain access to the EEC and United Kingdom markets for the textile products of other countries, but to do so in a way that would avoid the disruption—some would say the crucifixion—of the home-based industries. Under the new arrangements, the EEC will continue to be the world's largest importer of textiles with a rate of import penetration almost twice that of, for instance, the United States.
In introducing the debate, the Minister mentioned a number of the areas of the new agreement which commended themselves to him. On behalf of the Opposition, I should like to comment on a number of the changes and improvements which I see arising from the negotiations.
As a result of the renegotiations, agreements now cover larger number of countries and a larger range of products, and that is to be welcomed. Although they provide a growth rate overall of about 6 per cent. annually over the next five years, the growth rates will vary sharply between different categories of imports and different countries with minimal increases or none for the most sensitive items and for the most dominant suppliers. The global approach which is the feature of the agreement in some of the most sensitive products is to be welcomed.
We welcome the fact that greater opportunities will be given, in spite of the difficult economic climate, to the poorest, who will get better access to our market, although the price that has been paid is a cutback in the share of some of the more advanced countries such as Hong Kong and Korea. There will be a better chance even in very difficult times for the poorer countries, and the House will welcome that.
The new base levels for arriving at quotas, founded as they are on the 1976 levels of trade, are, we believe, much more realistic than the previous quotas, which tended to be based on the pre-MFA access levels. The Minister was made aware of that fact this evening by questions from both sides of the House. We realise, however, that arriving at a


basis for fixing a quota was extremely difficult, and, although there will be reservations about the new basis, it is on the whole a great improvement on the previous one and is probably about the best that could have been obtained.
Like the Minister, we, too, welcome the introduction and development of an effective trigger mechanism. It is extremely important. Although it will be most difficult to operate in practice, as has been mentioned repeatedly to the Minister tonight in interventions, a trigger mechanism for products not subject to existing quotas is absolutely essential.
I welcome the new flexibility and the new proposals for licensing and control which the Minister discussed this evening. If the arrangements are to succeed—this point has already come out very clearly in interventions—it will be absolutely vital for member countries of the EEC to develop common means for monitoring the arrangements. That will not be an easy task. The Minister told us just how many countries are involved and the huge range of products. Frankly, reaching the agreement, difficult though it may have been, may have been the easy bit. Actually making it work will be extremely difficult administratively.
I welcome the fact that the Minister recognises this and that he recognises that the United Kingdom Government will have to press very hard if the arrangements are to work out in practice, as we hope they will, to make sure that there is the development of a consistent system of monitoring and surveillance and that consistent records are kept so that the agreement can be properly implemented.
I always think that it is a mistake to talk about "the textile industry because a number of industries are involved in textiles. The attitude of the various industries concerned seems to be very well summed up in a letter sent to me by the British Clothing Industry's Council for Europe. The sentence that I wish to quote is as follows:
There is no doubt that the new regime is superior to the old in a number of significant ways.
Even so, it will be no news to the Minister—he has had some of the criticisms already—that there are still criticisms, and I should like to mention just two or three of them tonight. I hope that the hon.

Gentleman will try to deal with one or two of them when he replies to the debate.
As the House will be aware, there is fairly strong criticism of the absence of a recession clause in the agreement. Perhaps those negotiating it could not envisage our being in a recession which was deeper than the present recession, and perhaps it was not regarded as necessary, therefore, to build into the new arrangement a recession clause. However, I wonder how the Minister envisages that the problem will be dealt with in practice if the recession deepens and whether there are any contingency plans or whether Ministers have any ideas for dealing with the problems that could arise if the recession deepens.

Mr. Noble: Is the hon. Gentleman telling us that the policy of his party now with regard to a recession clause has changed? I recall that in the Statutory Instruments Committee, for example, the hon. Member for Worthing (Mr. Higgins), particularly when he was spokesman on trade for the Conservative Party, argued with me that his party could not possibly accept the idea of a recession clause.

Mr. Parkinson: What I am saying to the Minister is that there are criticisms throughout the industry. A number of criticisms have been made to us. I am pointing out just one or two of them.
One of the criticisms that has been made to us is that there is no provision for a recession clause. I just wondered—because, equally, the Minister must have considered this matter—whether the Government have changed their ideas, perhaps, about the need for a recession clause and what ideas the Government have about dealing with this contingency and raising it.

Mr. James Lamond: Surely the purpose of speaking from the Opposition Front Bench is not merely to wonder about the Government's attitude. On a simple issue such as this, it would be rather nice to hear a plain statement of the Opposition's point of view.

Mr. Parkinson: One of the joys of being in Opposition—

Mr. Noble: Come on.

Mr. Parkinson: —and standing at this Dispatch Box is that it is our privilege


to ask the questions. I know that the hon. Member for Oldham, East (Mr. Lamond), has like myself, sat through Prime Minister's Question Time and has come to the conclusion that there has been a reversal of roles and that the Government ask the Opposition questions and it is the Opposition's job to give all the answers. That is not the situation. It is the reverse. I am exercising the proper rights of an Opposition in asking the Minister some questions and making sure that the people we cannot mention, who have been brought here tonight, have something to show for their presence.

Mr. Nicholas Winterton: That is splendidly diplomatic.

Mr. Parkinson: I thank my hon. Friend.
Another matter which has been raised with us and on which I should also like to have the Minister's comments is the question of suits from the COMECON countries and the basis on which the price clause will be operated. The clothing industry has told us that there are doubts about its value in the agreement because the price comparison is with the lowest price of garments from a third country—which could include developing countries like India and Korea. One would then be comparing the prices suggested by States with centrally planned economies with those of developing countries and not with those of developed countries. I wonder whether the Minister would comment on that.

Mr. Meacher: Perhaps I may do so immediately. On the question about a recession clause, there is a provision for a review if called for by either party after two years. I am not sure whether the hon. Member or his predecessor as a trade spokesman agrees with that. Perhaps he will say.
As for the price comparison for suits or clothing from State trading countries, the provision under Regulation 459/68 of the Community is that the comparison will be made with a product as near as may be to the product from the State trading country. Nothing compels that comparison to be made with a developing country's product. Certainly, under that regulation there is some easing as compared with the 1969 Act of this country.

Mr. Parkinson: I thank the Minister for those answers. The one about the basis for a price comparison will be particularly welcome because it has been raised with us by the clothing industry.
To repeat something I said earlier, there is real concern not about the terms of the agreement but about whether administratively it will be possible to make such a complicated agreement stick. I hope that the Minister in replying will say, a little more fully than his hon. Friend was able to do in his opening speech, just what plans the Government have for pushing ahead with making sure that proper administrative arrangements develop to make the agreement stick.
In the debates to which I first listened about the textile industry, one was bombarded with expressions of concern, and if one did not have textile interests in one's constituency could easily have been left with the feeling that the industry was a sort of gigantic corpse into which a few very earnest Members were trying to breathe a little life. Nothing, as we all now know, could be further from the truth.
It was of great interest to me to get reacquainted with the textile industry after a long absence from it. One cannot fail to admire the way in which it has responded to competition or to see the improvement in productivity, the way in which management has invested and installed new machinery and the way in which labour has co-operated with management in improved manning levels to ensure that the productivity which is vital to the industry's continued competitiveness is obtained.
One cannot help comparing this industry with a number of our other troubled industries, such as the motor industry. Far from adding to their problems, in the textile industry management and labour have combined to try to defeat them, to combat the problems that are being imposed on them. Many companies, such as British Leyland, seem to be seeking to add to their own problems and those that the world imposes on them.
The industry has responded to the challenge of competition. It has not merely demanded protection and the right to carry on in its own ways. It has modernised and it has improved productivity. The industry's production of nearly £10,000


million-worth of goods a year is considerable. It represents a substantial proportion of our gross national product. Exports of £2,000 million a year, as were achieved last year, are also very impressive.

Mr. Madden: The hon. Gentleman has rightly been talking about competition. I wonder whether he is aware that the British Textile Confederation has issued to a number of hon. Members a communication in which it says:
All the major political parties accept the need for restraints on textile and clothing imports and from countries whose wages, social conditions and trading patterns make competition with them totally unequal.
Does the hon. Gentleman accept that as a fair summary of his party's position? He has been rather reluctant to answer a number of questions put to him, but, for the sake of the confederation and those who are guided by it, could he reassure us that that is the position of the official Opposition?

Mr. Parkinson: That is probably the most superfluous question that has been asked for a long time. The British Textile Confederation issued that document because the people who run it took the trouble to read last year's debates on the subject and the various statements that have been coming out continuously from my hon. Friend the Member for St. Ives. It was on the basis of what it read in debates in the House and statements by members of the Conservative Party, speaking for the party, that it said what it did. The answer to the hon. Gentleman's question is "Yes".
Although the agreement is not all that the industry desired, I am convinced that it was the best available and that the Secretary of State deserves congratulation on his part in obtaining it. I hope that the textile industry will take advantage of the new arrangements to increase its share of the home market and, working from that improved home base, improve its already very impressive export performance.
There can be no doubt that throughout the House we wish the textile industry well. As a result of this renegotiation, it now has the opportunity to plan its future in a rather more predictable market. It has the opportunity to go

ahead with its plans for investment and for improving productivity against a more settled background. We on the Conservative Benches, and. I am sure, hon. Members throughout the House, hope that it will be successful in its attempts.

8.49 p.m.

Mr. Ben Ford: I am very pleased that we are having this short debate on textiles. Like the hon. Member for Hertfordshire, South (Mr. Parkinson), I join my colleagues who are members of the all-party Wool Textile Group and members of the trade in congratulating the Government and the Ministers concerned on the persistence with which they have pursued these agreements to a pretty satisfactory end. As has been said, they are not 100 per cent. satisfactory, but I think that most people would agree that the Government have got about everything that could possibly have been obtained in the circumstances.
It is important that we have such agreements as these. As has been remarked, this industry employs 830,000 people. Only a few years ago, well over 1 million people were employed in the industry. The run-down has been largely as a result of cheap imports, which have undermined the industry. I believe that these agreements will provide a framework for a better order in world trade in textiles and clothing and that this will be an improvement on recent years. I hope that they will provide a framework which will re-establish confidence in the industry and enable us to offset some of the doom and gloom that have come from many of the Jeremiahs in the industry in the past.
I know that the Government are aware that there are certain areas of concern to people in the textile industry, and I will put two specific questions to the Government which I hope the Minister will answer when he winds up the debate.
First, will the Community press for Community action as soon as the EEC is entitled to ask for a quota on a product for which a country with which we have an agreement becomes a significant supplier?
Second, will the Government press for Community action as soon as a low-cost country, with which we do not yet have an agreement, becomes an important supplier of textiles and clothing?
In connection with the last question, I bring to the attention of the Minister the low-cost wool cloth imports from Argentina. This matter is now causing great concern to the wool textile industry. The wool cloth is coming in from Argentina at ridiculous prices which barely cover the cost of the raw material, from wherever it may be obtained. There has been a dramatic increase in volume in the supply of this cloth between 1976 and 1977, and possibly tomorrow the Minister will find a motion on the Order Paper asking him to apply an immediate countervailing duty until such time as we can conclude other forms of agreement with Argentina. We hope that the Minister will take this one out of the basket and activate the trigger mechanism.
Grateful as it is for the agreements that have been arrived at, the wool textile industry merely requires an opportunity to trade in fair circumstances. It is not seeking protection for the sake of protection. It wants fair trading. I am satisfied and it is satisfied that it can do its job for this country.

8.53 p.m.

Mr. Hugh Dykes: The House would feel it presumptuous on my part if I were to intervene at great length. I know that there are many hon. Members with much greater experience and knowledge, as well as obvious local geographical and constituency interest in various parts of the textile industry, and they have by definition, therefore, a prior right, I should have thought, to speak in the debate.
I intend, none the less, to intervene briefly, with the approval, I hope, of the Liberal Party spokesman on textiles, to make one or two points from the Community standpoint, and perhaps also one or two very quick points on the outlines and the framework of the agreements.
As my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) and the Minister have said, one would have thought that hon. Members in all parts of the House would welcome these agreements and the formulation of the textile protection regulations. I missed certain aspects of the very brief exchanges earlier, when the Minister was speaking and the hon. Member for Farnworth (Mr.

Roper) intervened, but this is a debate concerning primary EEC legislation as opposed to the usual so-called secondary legislation—and even that is a misnomer—when we are considering directives.
Here, there is no absolute strict right on any national Parliament to consider these matters in the usual sense of processing legislation in the Community. However, that does not rule out what we quite rightly do in this House, which is to scrutinise all sorts of things, including elements of primary EEC legislation such as regulations.
With great hesitation, I disagree very slightly with my hon. Friend on one point which he made at the beginning. I do not think that these documents are particularly extra-complicated over and above anything that we see by way of national legislation.

Mr. Madden: They are all bad.

Mr. Dykes: The hon. Gentleman is presumably an enthusiastic supporter of the textile protection regulations. It is no good his glibly and superficially saying that they are all bad and dismissing what the EEC does in that sense. That merely irritates sensible people.
I believe that these documents are as comprehensible as any legislation that we see in this country, particularly when one considers complicated schedules, technical elements attached to Bills, statutory instruments and all the regulations and orders issued by the Government as a result of primary national legislation. There is intrinsically no particular extra complexity in the documents, although the subject matter is itself very complicated. Indeed, I would say to hon. Members who try to single out Community documents and papers for extra special harsh treatment and judgment that if we considered the actual clauses of the regulations we would discover that they are couched in similar terms to domestic Bills.

Mr. Parkinson: The point I was trying to make is that I regard the agreement and the renegotiation as a momentous and important event. The House learned about it officially by way of a Written Answer to a Parliamentary Question. Four months after the event, we are now looking at a series of documents which in themselves are not ultra-complicated. But that still seems a slightly anti-climatic way


of this House finally arriving at debating what was a very important renegotiation. That was the point I was trying to make.

Mr. Dykes: I am grateful to my hon. Friend. Of course I agree with him, but I think that that is more of an aspect of the complicated timetables and timing of these scrutiny debates, some of which are well ahead of any decision in the Community and others of which are, as in this case, well behind. That seems to be perfectly in order. I believe that the House is still coming to grips with learning about the different kinds of Community instruments emanating from the EEC. In this case, regulations are less familiar to us as bits of paper than are directives or other communications.
I should like to ask a couple of quick Questions. These are points that have been put to us by the trade association concerned with clothing, in particular, the European arm of that association. First, can the Minister say anything more about the position of special products from India? I gather that there are still slight question marks—at least, in the minds of some people in the industry—about this aspect. We understand that there will be specific quotas for some garments and a special trigger mechanism for others, but, again, some people consider this to be rather generous.
The price which the Commission has paid by way of quota size is substantial. For instance, I gather that, with regard to the expansion of category 8—woven shirts—imports from India alone have increased from 2,900,000 in 1975 to 8,500,000 in 1978. There is a very substantial expansion. That is one particular esoteric special example from one country only. If we take the generality of all the products from all countries, it is true to say that, although this is an agreement which to some extent by definition has a delimiting effect on trade, none the less it comes from a position in which there has already been a substantial tangible expansion of cheap imports into the Community in products of this kind. Many people in the underdeveloped countries have no reason to complain about the Community's reasonable attempt to create more orderly conditions when the domestic industries are under such an obvious threat.
I would repeat the question with regard to the imports of particular products, especially suits from COMECON countries. Again, I believe that reassurance is perhaps needed on that score, and I hope that the Minister will say something more in his winding-up speech.
I conclude with two separate but related points. In this debate the Government have been praised, and, quite rightly, the Secretary of State has been praised, as have the Under-Secretary for his role in this and other Ministers in the Department of Industry in the sense that they were also involved. The House has praised itself for the united position that it has adopted on these agreements. However, the Community has not been praised except indirectly and perhaps by inference. It has not been praised openly.
I should have thought that this was one occasion when even those hon. Members, for eccentric reasons, are deeply sceptical about the verities of the Community and its importance to the member States in the future would have had some praise for the Community in view of the value of this achievement in the Community of getting nine member States to come together in these textile protection regulations. It is a remarkable feat in itself. I cannot understand why some hon. Members cannot feel able to praise the Community at least on this one aspect even though they criticise it on others. It irritates objective, neutral, sensible members of the public when they see a myopic attitude being adopted by certain hon. Members in refusing to praise what is a remarkable achievement by the Community countries.
Related to that, the industry has been very well organised in putting forward its collective arguments for additional legitimate protection along these lines rather than for some grotesque limitation of trade and in demonstrating that it believes genuinely in free trade. The industry has been successful in pressing for this protection in this country, in France, in Germany and in the other member States. The industries of those countries have themselves acquired a European dimension, therefore, at least in terms of consultation through the equivalent of a European trade association. It means that they themselves are well aware of the importance and relevance of the Community to its members.
As a result of this achievement in these agreements, we all wish the industry well. We recognise that it has had an extremely difficult time in recent years and has faced the cruel blizzards of unfair competition from other parts of the world. It is now up to the industry to show that it can flourish when additional protection of a legitimate kind is provided, without going into regrettable limitations on fair trade and competition. I believe that the British textile industry will flourish enormously in this new regime.

9.2 p.m.

Mr. John Roper: In common with other hon. Members who have spoken, I welcome this agreement. It is an important and in one way an historical debate that we are having tonight, because over a long period I can remember taking part in debates in this House and elsewhere about the likely impact of Community membership on the British textile industry and whether it would be possible for us once in the Community to get additional protection.
I know that this is not a view that will be shared by all my hon. Friends, but this seems to me to be one of the areas in which Community membership has already paid dividends. As part of the European Community, we have been able, by persuading our partners to agree upon a negotiating mandate for the Commission that was in the interests of the British textile industry, to use much more muscle internationally in negotiations than would have been possible if we had spoken on our own. We have been able to influence the policy of the Community from within in a way that would not have been possible if we had not been a member of the Community.
There is no doubt that great credit must go to my right hon. and hon. Friends for the part that they played in the Council of Ministers in ensuring that the Commission's negotiating mandate was a tough one. However, tribute should also be paid to the Commission's own negotiating team for its work in carrying out that mandate.
I was interested to read what my hon. Friend the Under-Secretary wrote about the way in which the Commission had carried out its negotiating mandate. He said:
For the most part, the Commission have kept very close to the terms of the mandate

—closer, indeed, than might have been expected given the very difficult nature of the negotiations.
This shows that the Commission is able, if given a proper negotiating mandate by the Council of Ministers, to act on the world scene in a useful and effective way in developing an effective framework within which our industries can operate.

The Under-Secretary of State for Industry (Mr. Bob Cryer): Will my hon. Friend accept that in keeping the Commission negotiators to that mandate a great deal of credit should go to the British Government? Over a long period we exerted a great deal of pressure to maintain the strong negotiating position.

Mr. Roper: I accept that, and I said earlier that my right hon. and hon. Friends played an important part within the Council of Ministers in persuading their colleagues from other countries to adopt a tough negotiating mandate.

Mr. Madden: Before my hon. Friend gets too carried away, has he seen the Press stories this week reporting an EEC agency forecast that, by 1985, 1·75 million European textile workers would be redundant? Does my hon. Friend believe that this report is accurate? If so, does he not agree that we should be negotiating harder than we have been hitherto?

Mr. Roper: I was coming to that report. It was not from an EEC source; it was from an article in today's issue of The Guardian, written by Brij Khindaria from Geneva, about a paper being discussed by delegates to the textile committee of the International Labour Organisation, which is a United Nations agency and not an EEC agency.
I want to follow some of the discussion between my hon. Friend the Under-Secretary of State for Trade and the hon. Member for Macclesfield (Mr. Winter-ton) about the effectiveness of surveillance control. Quite clearly, particularly in the area of imports from the Mediterranean countries, surveillance control is very important. We are satisfied that the 16-day period for surveillance reporting in this country is adequate. However, the figures for the Netherlands—which is surprising, because this is usually an efficient and modern Administration—and Italy—which surprises me leas—both seem to be extremely alarming.
Would the Minister reconsider the response given by the Under-Secretary to the hon. Member for Macclesfield when he suggested that it was up to Comitextil and the industry in the various countries to do something about improving the speed with which reports are made to the EEC in Brussels? The Community should consider this and see whether it is possible by regulation to have a more effective way of reporting the surveillance licences to the authorities in Brussels. I am not satisfied with the answer that we have had today, and I hope that this can be looked at not merely at national, but at Community level.
I return to the article to which my hon. Friend the Member for Sowerby (Mr. Madden) referred, which was reported in The Guardian. This was a paper submitted to the ILO textile committee meeting at present in Geneva. I hope that the Minister will say something about the background to this paper. Was it prepared in the light of the MFA renegotiation or prior to that renegotiation without taking account of the beneficial effects that the renegotiation will have?
The figures that are quoted, as my hon. Friend the Member for Sowerby said, are somewhat alarming and require further examination. If we look at the old Multi-Fibre Arrangement that existed between 1974 and the end of last year, we see that there were two serious defects. First of all, the basic level for import quotas and the annual rates of growth were appropriate for the importing countries in a period of substantial economic growth. They might well have been appropriate in the 1950s and 1960s. They were totally inappropriate during a period of depression.
Secondly, the old MFA was totally unable to cope with the problems of cumulative disruption—a situation in which import penetration is high and growing but the imports come from a wide range of countries and once we think that we have dealt with one, another source of supply comes up somewhere else, so that cumulatively it was disastrous for the textile industry in this country and in other European countries.
That is why the new agreements mark such a significant step forward in providing an effective framework within

which textile industries in Western Europe can operate. As my hon. Friend the Under-Secretary of State for Trade—Member for Oldham, West (Mr. Meacher)—said, the fact that we now have 95 per cent. or 98 per cent. of our imports covered is one side of the matter, but perhaps much more important, or as important, is the fact that the system of control operates with a much finer mesh than was the case under the original MFA, covering 123 product groups as distinct from the 60 or so product groups that were covered under the old arrangement. There is the distinction between different categories of goods, ensuring that the future growth rates will be related strictly to the degree of import penetration in that particular commodity.
The other matter that is of very great importance here, and that extends this agreement beyond the 33 countries with which the Commission has reached bilateral arrangements, is that the trigger mechanism that has been introduced in the new agreement will, I believe, extend protection to new suppliers once they try to enter the market. This is very important, because of the cumulative disruption that we suffered under the old MFA.
Finally, I believe that one of the things that was right and was advantageous in the new MFA was the way in which the three biggest suppliers—Hong Kong, Taiwan and South Korea—were effectively squeezed in order to provide a larger share for the suppliers in poorer Third World countries. I think that this was right, although, like other hon. Members, I have received considerable representations from Hong Kong about the effect on that particular colony. None the less, if it is a trade-off between Hong Kong and India, the decision taken was the right one.
This is an important step forward in providing what has been described by Ministers as the most effective form of protection that the textile industry in Europe has ever had. I am not quite sure what Cobden is doing in his grave at this time when he contemplates what is happening, but, in general, Lancashire is, I believe, greatly relieved.
My hon. Friend the Member for Grimsby (Mr. Mitchell) said that Cobden would be against the Common Market. Cobden, of course, was responsible for


negotiating the first of our important trade agreements with one of our Community partners, in the Anglo-French trade agreement of the 1870s. As I suggested earlier, this is an example of the success of the Community in influencing and determining the economic environment in which one of our industries, which has suffered considerable difficulties, can operate.
I am glad to see that the Community is now looking to see what can be done on a similar basis for the footwear industry. I hope that in the near future we shall have an opportunity to discuss the sort of proposals that it can bring forward in that area. This will give the industry an important breathing space. Let us hope that it will take advantage of it to maintain the jobs that already exist and to see a way of extending the important export trade that it has.

9.15 p.m.

Mr. Cyril Smith: I do not intend to speculate about Cobden, except to say that I believe that he has a worthy successor as Member of Parliament for Rochdale, a position which at one time he occupied.
With the exception of the rules of origin document which we are considering, S/183/78, most of the material in the documents before the House is, as the Minister said, already in operation. Therefore, we are now going through a rubber-stamping operation. I do not complain on that account, but it seems to me that we are in danger of becoming intoxicated and of displaying a spirit of euphoria about what has been achieved without understanding that there are some weaknesses in the system. It is the job of this House to draw attention to those weaknesses.
I do not wish to take any credit from the Minister for the work he has done or for what he has achieved. However, I know that he would take the view that the House would be failing in its duty if all that we did was to pat him on the back and say what a great job he had done without at the same time drawing attention to the worries and fears that still exist despite the agreements.
I welcome the Minister's statement that the Government must be ever vigilant when dealing with the textile industry. We have had quotations this evening from a

letter written by the British Textile Confederation. Perhaps I may quote one sentence from that letter. It says:
It is important to remember, however, that they"—
that is, the new agreements about which everybody is getting so worked up—
provide overall for increased and growing access to our market, although at a slower rate than in the recent past.
It is important that we should remember that fact.

Mr. Nicholas Winterton: Will the hon. Gentleman concede that in regard to woven shirts the increase in imports from 1977 to 1978 was 10 per cent., which is a substantial increase in a highly sensitive area?

Mr. Smith: I agree with the hon. Gentleman. Later I shall be drawing attention to percentage increases which are greater than the percentage growth in the market. Therefore, that means that there has been greater import penetration into the existing market.
Although I compliment the Government and the Minister on the negotiations and the work which they have put in—it would be churlish of me not to do so—I believe that it is my job as a Member of Parliament to make it clear that things are not as rosy as they are being made out to be. Thousands of textile workers still face the dole or short-time working.
It is to the Government's credit that thousands more such workers would be queuing up at labour exchanges drawing unemployment pay if it were not for the existence of measures such as the temporary employment subsidy. Therefore, although we accept the agreements for what they are, we must all stress that vigilance is still very much required. We want the Government to protect the industry from unfair competition, and we are not entirely satisfied that that has yet been done.
The Multi-Fibre Arrangement is reasonable and passable, but there are already signs, as I have been told by senior men in the industry, that the new arrangements are not perfect and are not working entirely satisfactory. The agreement has not created the confidence which we were told it would bring about. For example, we find that there are no restraints on Japan. That may be difficult


for the Government to do, but Japan is now sending textiles to this country. Therefore, it is not enough for the Front Benches to say that everything is all right—certainly the Conservative Front Bench spokesman took that view—and to pat everybody on the back. There is still cause for concern.
I have mentioned Japan. Turkish yarn imports also continue to cause concern, and they are not directly covered by the MFA.

Mr. Parkinson: I sometimes wonder whether the hon. Gentleman ever listens to anyone else's speech. If he did not hear us all express reservations, he cannot have been listening. There was none of the complacency about which he is complaining. Perhaps he had better listen a bit more in future.

Mr. Smith: I am delighted to hear that the hon. Gentleman is not as complacent as I thought he was. I assure him that I always listen to speeches that are worth listening to, especially when they are made by people who know something about the industry they are talking about.
I hope that the Minister can tell us what special arrangements have been made—and they are promised in the documents—to control the imports of Turkish yarn.
The documents mention bilateral agreements with a number of low-cost suppliers, but make no mention of Mediterranean associates, some of which are low-cost suppliers. I have already mentioned Turkey. Greece is another such supplier. It is essential to have a clear and effective mechanism for dealing with unfair or disruptive competition from within the EEC and its associates. This will be even more important if the EEC is enlarged to include countries such as Spain and Portugal.
There is considerable concern about Spanish imports. The industry claims to have clear evidence that, while Spain is sending goods into this country at a competitive price, customers, on the basis of complaints about quality, delivery date or something similar, can easily obtain credit notes from Spain which mean that they have the goods at a much lower rate than is shown on the original invoice. If Spain is to join the EEC, I hope that the

Government will pay careful attention to this problem.

Mr. Noble: Will the hon. Gentleman confirm that the discounts—and that is a fair term for them—are often about 25 per cent. and are, in fact, discounts obtained on the fiddle?

Mr. Smith: I am grateful to the hon. Gentleman for backing up the point I was making.
The Department's supplementary explanation of the document says that the agreement should provide the industry with greater protection. I hope that this is true, but we have not had much protection in the past. It is the level of improvement which matters and not just an improvement, because that could amount to very little.
In document S/183/78, the Department talks about growth rates being below 6 per cent., but since that is above the market growth of many products, some of which are often below 1 per cent., that sort of import growth could mean the end of the textile industry in 10 years or so. It is all very well for people to tell the industry to brace itself and get ready to meet the challenge of competition, but, if we continue to allow a growth of imports at a higher level than the growth of consumption, our industry will inevitably decline over the years. There is no room for complacency or self-satisfaction.
Document R/3375/77 deals with proof of origin. It is essential that we should try to preserve the principle that Community origin should be given only to products which have been truly and substantially processed within the EEC. 'That is vital. I hope that the Minister will insist on that when he next attends a meeting of European Ministers. We must insist that, if there is a certificate of origin from Europe, the goods must have been substantially produced in Europe.
There are bound to be loopholes in so complex a document. I hope, therefore, that it will be possible in negotiations for the right to be reserved to deal with anomalies or loopholes as they might arise, at least in the initial period. I hope that the Minister will be able to reserve that right.
In the accompanying notes with which hon. Members have been supplied, I


note that Italy, France and Ireland require certificates of origin for goods subject to import restriction. I hope that the United Kingdom will follow those countries in requiring such certificates. Such a requirement would make available to the United Kingdom administrative delay procedures that some other countries are able to use effectively in times of stress and recession.
I draw to the Minister's attention the views of the British Chamber of Commerce about certificates or origin by saying that I hope he will insist that invoiced declarations by exporters are not acceptable as alternatives to certificates of origin except in rare cases—in other words, the MFA quotas that allow for uncertified invoice declarations will be regarded as the exception and not the rule—and that no precedent will be taken for introducing a method of doing away with certificates of origin.
There is much that requires to be done to give the industry the protection that it deserves. The tyre industry, for example, is not unconnected with the textile industry. As the tyre industry is now suffering, largely as a result of the dealings of multinationals in demanding that tyres used within the United Kingdom are produced outside it—certainly that applies to the cord that is used in making the tyres—there are serious problems for some sections of the textile industry. I have tabled a number of Questions about those problems. In addition, there is the denim that is coming in from the United States. Man-made fibres and a mixture of fabrics are also causing concern.
There is a need for anti-dumping legislation. Under the new agreement, we need to stop the bunching of imports so that many of the quota floods may be regulated. In other words, if it is possible for a large proportion of the quota to be taken at the beginning of the year, the market is flooded. That does not happen if the quota is spread over a year. It is to be hoped that something might be done in that respect.
I take the opportunity to commend to the British public the new pamphlet published by the Textile Industry Support Group called "Buy British". I hope that the public will buy British. The textile industry is a modern-equipped essential industry and it must be treated as such. The textile workers of Lanca

shire and Yorkshire deserve better than they have had under both Tory and Labour Governments.
The Minister must make it clear in the EEC that we are seeking a fair deal for the industry. We seek that for the sake of sanity, fair play, honesty and those employed in the textile industry. When the Minister next attends a meeting of EEC Ministers, I hope that he will make it clear that that is exactly what Members representing textile constituencies intend to have, EEC or not.

9.30 p.m.

Mr. Mike Noble: I am pleased to follow the speech of the hon. Member for Rochdale (Mr. Smith), because he has played a constant role in the battle that we have had for textiles. He has always been present in our debates and has always pressed the industry's point of view on the Government. That contrasts with the official Opposition party.
I welcome the presence of the hon. Member for Hertfordshire, South (Mr. Parkinson) to our debate. We have seen a number of Opposition Front Bench spokesmen on textiles come and go. One of my colleagues mentioned to me that if only the British people would change their shirts as rapidly as the official Opposition change their spokesmen on textiles, the crisis in the industry would be over.

Mr. Nicholas Winterton: Is the hon. Gentleman aware that the hon. Member for Macclesfield can provide the alternative and the shirts?

Mr. Noble: One of our greatest regrets is that we have not yet seen the hon. Member for Macclesfield (Mr. Winterton) at the Opposition Dispatch Box in textile debates.
It was significant that a few weeks ago a previous official Opposition spokesman on textiles, the hon. Member for St. Ives (Mr. Nott), came to my constituency to address a meeting of Conservative trade unionists on the question of the official Conservative line on textiles. The 20 people who attended from North-East Lancashire, including the speaker, his associates, the party agent, the candidate and his wife and party officials, were disappointed that no line on textiles came from the Opposition. Tonight we can


understand why. The hon. Member for Hertfordshire, South persistently refused to answer the simplest questions put to him by Labour Members.
The fact is that when the Opposition talk about a bipartisan approach to the textiles industry, we can identify the point where that bipartisan approach developed It developed on 21st February 1977, when the Government announced their policy on the MFA. The Opposition jumped on the Government's back because they knew that there were 14 textile marginal seats in Lancashire. That is the extent of their interest, with the honourable exception of the hon. Member for Macclesfield.
I wish to make some observations on the MFA. I begin by congratulating my right hon. Friend the Secretary of State for Trade, the Under-Secretary of State my hon. Friend the Member for Oldham, West (Mr. Meacher)—and the civil servants who were involved in the negotiations on the excellent job that they did in getting the Multi-Fibre Arrangement introduced.
I shall not sing a paean of praise for the Common Market. The fact is that the Government adopted a position and were forced to hammer it through the Common Market, at times in the teeth of substantial opposition. I should like to know from those who want to say that this is a Common Market achievement where we would have been had the Government been prepared to adopt the same kind of MFA Mark I as we had in the Common Market. We would have had nowhere near the number of restrictions that we now have. I think that my right hon. and hon. Friends deserve credit for that.
I want to comment, as other hon. Members have done, on some of the strengths and weaknesses of the agreement. Since this debate is on Community textile policy in general, I want to base most of my remarks on other aspects of that policy.
The Mark I agreement led to wholesale disruption in the textile industry in this country. It allowed a massive inflow of imports. The agreement was evaded, as far as we can tell, and as a result thousands of textile workers in the North-West and in other parts of the country were made redundant.
The present agreement is a much improved version. It covers a much wider range of commodities and countries. It has an improved mechanism for dealing with significant suppliers, it deals with sensitive products on a global basis and it reduces the level of growth in those products to a considerable extent.
However, there is still considerable cause for concern about the agreement. The fact that it allows a measure of growth of textile imports at a time of recession means that it will be some time before the Multi-Fibre Arrangement Mark II begins to bite. We should bear in mind that, despite all that has been said about the agreement, we are still talking about the textile industry in the midst of a devastating crisis.
Last week a group of us met representatives of the industry—employers and trade unionists. The agenda included 19 items of crisis; 19 items that were bringing unemployment and continuing short time working; 19 items which meant that mills were closing, such as the Tootals Mill, in Bolton, the closure of which was announced recently. That is a situation that we are talking about. In that situation any increased growth of textile imports can be devastating.
One of the specific points about which we are concerned, and which is included in the agreement, is that it allows for a measure of bunching. That means that one can get more of a proportion of imports coming in in the early part of the agreement. That in itself is causing serious problems for the industry.
There are substantial dangers arising out of the informal understanding with the Mediterranean countries. Hon. Members have mentioned these countries already. I was pleased to note that the Minister said that action on Spain can be taken promptly. Some weeks ago I mentioned to him the fiddle involved in the import of Spanish yarn. Discounts can be obtained. I should like some assurances that the fiddle is being tackled and that those merchants who are offering large quantities of yarn for sale from the Mediterranean associates can be stopped so that we can end this damage to confidence.
My hon. Friend failed to clear up another question satisfactorily. These


informal arrangements with the Mediterranean associates are on only an annual basis. I should like an undertaking, regardless of the negotiating position of Spain, Portugal and Greece and regardless of the pressure of retaliation from Turkey, that we shall have no more imports of textile products from the Mediterranean associates next year than we have this year. It is essential that the Government stand firm on this issue and that they demand action from the EEC.
A number of my hon. Friends mentioned the weaknesses in the surveillance and monitoring techniques in the MFA. Its value exists entirely in the effectiveness of these techniques. In Italy there is a delay of about 10 weeks before information is available. Given the nature of the textile industry, in which a sudden flood of imports can lead to massive disruption in a short time, that delay is seriously damaging.
I pause to mention that there is now a further Front Bench spokesman or attendant for the Tory Party in the Chamber. We welcome the hon. Member for Harrow, East (Mr. Dykes). The 10-week delay compares with the 16-day period involved in this country. There is still a suspicion of free cycling of imports within the Community. The textile unions believe that this is the reason why there is no effective surveillance in Holland. That absence of effective surveillance can result in serious damage to the industry.
What pressures can Ministers bring to bear on the EEC to correct this? The Minister's response that we can only persuade was not satisfactory. If the EEC claims that it is handling this problem on our behalf it must deal with the absence of an effective surveillance mechanism in the member countries.
On the whole the MFA is a substantial step forward. It provides much greater protection than the industry has experienced before. Not only Members of the House but people in the industry recognise that and welcome the stand taken by the Government. We must take action as soon as possible wherever there is a sign of disruption from new sources, and we must secure better control over the Mediterranean associates. We must also improve our surveillance techniques. That is the most urgent requirement.
Perhaps I may take up some of the points made by the hon. Member for

Rochdale on dumping. Many of us are not satisfied that the new arrangements for dealing with the problem of dumping within the EEC are satisfactory. There is a strong suspicion that denim is being dumped in large quantities from Switzerland and the United States, and this is disrupting some of the major producers in this country. Urgent action is required.
There is also the problem of the imports of tyres and tyre cord. I have a letter from the Oldham Tyre Cord Company Limited, which is situated in the Oldham West constituency. That company has had a record of 28 years of all-out production. In the last few months production has been cut back and the company faces a serious crisis, with the possibility of closure. The company makes the point in the letter that
The major cause of our problem has been the loss of sales of tyres by our customers the tyre manufacturers, resulting from the high level of import penetration. This is affecting them in two ways. Firstly, the importation of cars, which has increased substantially in the last 12 months, particularly from Japan, has resulted in the loss of a considerable part of the original equipment market. Secondly, the importation of tyres for the replacement market.
They point out that this tyre penetration has gone up from 10 per cent. in 1973 to 20 per cent. in 1978. These figures do not include the tyres imported by multinational companies or in the name of rationalisation. The letter continues
A large proportion of these imports are from Eastern European countries at prices far below the United Kingdom manufacturing costs. This poses the question, 'do these cheap tyres meet accepted safety standards?'".
I hope that my hon. Friend the Minister will take this matter up with the Department of Transport with a view to investigation. We have to come to terms with the position of the multi-national companies which in the last 12 months have been switching production around at the expense of British workers' jobs and British companies.
I wish to raise also the question of Government purchasing. During the last four years we have conducted in this Chamber—we have been supported outside by the unions and the employers—a substantial campaign to persuade Government Departments to buy British textile goods. Thanks to the pressure exercised by my hon. Friend the Minister


and some of his colleagues we have had a major success. I believe that my right hon. Friend the Prime Minister himself made a recommendation to the effect that Government purchasing departments should buy British. However, there is a strong rumour that this directive to the public sector will expire in July. Perhaps that is the result of some kind of pressure from the Common Market—I do not know whether that is so. If that is the case, that in itself will pose a serious and critical problem for many sectors of the industry, particularly those which are producing for the Health Service and for other Government Departments. The whole question of that directive should now be reviewed. Its operation should be continued indefinitely if there is to be any chance of restoring confidence to the industry.
Let me deal now with the EEC policy for textiles across a wider front. I am pleased to see the hon. Member for Harrow, East on the Opposition Front Bench because he told us what a wonderful job the Common Market was doing for the British textile industry. Even my hon. Friend the Member for Farnworth (Mr. Roper), who ought to know better, was saying that the Common Market had done a grand job, and when my hon. Friend the Member for Sowerby (Mr. Madden) pointed out to him a newspaper cutting he said that that was concerned with the ILO and it did not matter. I have a document which conies from the European Communities—it is a Commission background report dated 5th April 1978, and part of it deals with the textile industry. It refers to
lame duck industries".
Is our textile industry a lame duck industry? The hon. Member for Hertfordshire, South said that our textile industry has a first-rate record in investment, labour relations, marketing, exporting and so on. Here we have the Common Market saying that
Lame duck industries represent a threat not only to the trading efficiency and competitiveness of the Common Market but also to its unity, because, when demand falls in particular sectors, as for example with steel, textiles and shipbuilding, governments are tempted to bolster up the industry concerned with aid or even with import restrictions.
There we have it. Textiles is lumbered as a lame duck industry.
The document goes on to say that reorganisation is necessary, but
is possible only if workers can be certain at the same time of effective regional conversion measures being taken
—that is a bureaucratic phrase; it means "Go out on the dole, lads"—
including the provision of new jobs and the retraining of the workforce.… The creation of such jobs will first require renewed investment in industry and services, together with an improved economic climate and the application of specific measures for regional development.
There is a very powerful threat to the textile industry coming from the European Community. Whereas the article in The Guardian of today mentions a possible loss of jobs to the tune of 1·75 million in the European textile industry in the next seven or eight years, I have had a figure from a very reliable source—the trade unions within the textile industry—of 1·5 million in the next five years, throughout Europe.
We must ask whether the Multi-Fibre Arrangement is designed simply to create an opportunity to give the textile industry a decent funeral rather than a hasty burial. It seems to me that there are some sectors of the European Community that are determined to do the industry down.
I also have a copy of notes taken on behalf of the trade union delegation which met the Vice-President of the Commission, Wilhelm Haferkamp, who has special responsibility for external relations, when they went to discuss the prospects for the industry with him. Mr. Haferkamp said to the delegation that it was necessary, therefore, that the EEC must give up some of its traditional industries and that there had to be a programme of restructuring and a development of other industries. He said that whilst it had been hoped that a 10-year agreement would be achieved—he was talking about the MFA—only a five-year agreement had been possible. The five years obtained must be used for restructuring the industry. He said that it would be necessary to wait and see what happened in five years' time, but for the present we had to ensure that everything was ready for 1983. What does it mean to say "ready for 1983"? It means 1·5 million workers thrown out of work. We recall the words of Commissioner Vouel when he was talking about temporary employment subsidy and


the subsidising of industries, and said that this might be better dealt with on some occasions by social measures and unemployment rather than propping up industries.
Our case, and the Opposition's case—if they mean it—for the textile industry is that the industry is efficient and modern and that, therefore, it should not need propping up. What it needs is some kind of protection against unfair competition.
I go further. Only a few weeks ago, during the debate on the black list mark I, or at about that time, I introduced into the Chamber a document which was a black list mark II. It was a document from the Common Market. It referred to the fact that certain grants, on the recommendation of the Commission, were to be withheld from certain sectors of the textile industry. I should like to quote a letter from a source of some influence and knowledge within the textile industry. I am not at liberty to give his name, but if any hon. Member wishes to see the letter, I shall be pleased to give it to him. He orginally sent me the black list. He said in his letter:
As I understand it, the 'black list' is or was to be applied to any form of intervention by the Commission, whether it be for regional funding, social funding or European Investment Bank.
He went on further to say:
To me it is a negation of the democatic process that decisions, such as these
—referring to the withdrawal of grants—
could be taken and actions being implemented which could result in the elimination of small or large sectors of industry without concurrent provision for establishing or introducing new industries and work into the areas so affected.
That has happened in Italy. In the man-made fibre industry, 3,000 jobs have gone. We know what has been meant by "providing alternative work". Of those workers, 600 have got jobs—making plastic flowers. I do not want to see my constituents in the textile industry condemned to manufacturing plastic flowers when they have been highly skilled workers in the textile industry. As the representatives of those people, of the unions and of the employers, we have a right to know exactly what is in the Commission's mind about a future strategy for the textile industry.
What I have said paints a black picture. Regardless of the success of the

MFA, it is obvious that there are significant threats to the well-being of these industries. How can we ensure that they survive and that those workers who lose their jobs are adequately compensated? Some of my colleagues and I visited the British Textile Employers Federation in October and pressed strenuously for an industrial strategy. I am pleased to say that the employers have now come around to the union view that a shape is needed for the industry to take it into 1983, when the present version of the MFA runs out. That is due to pressure by the unions.
This industry must be planned in the interests of its workers. I would say to my hon. Friend the Under-Secretary of State for Industry—the Member for Keighley (Mr. Cryer)—that his Department has a substantial responsibility. It goes beyond a sector working party. The industry cannot be healthy when one major company controls such a large section, for example, of the spinning sector. That is a valid area for investment by the National Enterprise Board, where we should seek a planning agreement. I hope that the Minister will look at it in that way.
If the Common Market is planning the rundown of the textile industry to make 1½ million workers in Europe redundant—in other words, to lay the industry alongside steel and shipbuilding—those workers have a right to the same redundancy terms as are available in those other two industries. Some people have worked 40 years in the textile industry. What scope is there for retraining them? How can we retrain a Pakistani night shift worker who has difficulty in understanding English and consequently cannot get promotion in his own firm? They are not ciphers or beings to be manipulated by the Commission or any other gang of bureaucrats; they are people, and if they cannot get work they deserve the kind of compensation given in other industries.
The pamphlet to which the hon. Member for Rochdale referred exhorts us to "buy British". The reason is jobs. We should start shouting that message louder. In terms of quality, price and delivery, the British textile industry can compare with any in the world. It is time that some buyers from our big stores came to terms with that fact and decided to support this country as well as the textile


workers have been supporting it for the last 25 years.

Several Hon. Members: rose—

Mr. Speaker: Order. This debate will have to end at 11.30 and five hon. Members hope to catch my eye—apart from the winding-up speech. They can do so only if others will make shorter speeches and at most take less than 15 minutes.

9.54 p.m.

Mr. Nicholas Winterton: I shall certainly heed your advice, Mr. Speaker, to ensure that all hon. Members who wish to speak can take part in this important debate.
I am pleased yet again to follow the hon. Member for Rossendale (Mr. Noble), who has entertained the House with a controversial and interesting speech in his normal manner. I find myself in considerable agreement with a great deal of what he said, with many of the proposals he put to the Minister and with many of his requests about how the textile industry in this country should proceed.
May I say very strongly from the Opposition Benches that if Europe is planning to phase out the European textile industry—I am naturally particularly interested in the United Kingdom textile industry—and make 1½ million people unemployed, or to try to direct them to other industries, I hope that the House will give a firm answer to that proposal tonight, saying that it is a non-starter. The British textile industry is a vital and strategic industry in this country. We believe that our industry must survive, just as we believe that the textile industries in other European countries must also survive in order to form part of the economy of Europe as a whole, and a very important part of that economy.

Mr. Roper: The hon. Gentleman is suggesting that there is a plot to undermine the European textile and clothing industry. How can that be consistent with the fact that the Commission and the Community have just negotiated what can be described, and has been described by the industry and Ministers, as the most effective protection the industry has ever had?

Mr. Winterton: I remind the hon. Gentleman, who, I know, plays a leading

part in the European Parliament, that the statistic I have just quoted—that 1½ million persons might well be redeployed from the textile industry in Europe—was mentioned a few minutes ago by his hon. Friend the Member for Rossendale. All I can say is that I know that this matter has been raised and discussed because it has been raised in my presence, and in the presence of the hon. Member for Rossendale, by leading representatives of the textile industry in this country, who have regular contacts with their counterparts within the European Economic Community.
But, having said that and stated firmly that I would not be party to any agreement to reduce the size of the textile industry within the EEC, or within the United Kingdom as part of the Community, I agree with the hon. Member for Farnworth (Mr. Roper) that the Multi-Fibre Arrangement which has been negotiated is certainly the best agreement that the textile industry in this country could have negotiated. It certainly can be considered a considerable triumph for Europe as a whole to have negotiated it.
I pay tribute to all those—the Government and others—who have been party to the MFA, which, whilst I hope it will be good, is very much untried. How right the Minister was to say that we have yet to see how effective the MFA will be. Three months into the MFA is no time to judge this new agreement. Perhaps this time next year or the year after will be the time to judge just how effective it has been.

Mr. Dykes: I find myself in a difficult position, because there is no way in which the Commission or the Community is represented officially in this House. But I am sure that my hon. Friend would not wish to mislead the House into thinking that there is any proposal in the Community to, to use his phrase, phase out the British textile industry or employment therein. Simply because a Labour Member suggested that, quite irresponsibly, in a speech earlier, it would be wrong for my hon. Friend to follow up such an erroneous and misleading idea.

Mr. Winterton: I endeavoured to advise the House that that figure had been mentioned to me outside the Chamber—although it was raised by the hon. Member for Rossendale—by leading representatives of the British textile industry. I


hope that it is no more than a story or a rumour, but it is always best that even a rumour should be scotched at the earliest possible opportunity. I have put my weight behind the argument that that rumour must never start. We have a duty to a vital and strategic industry.
I went on to pay tribute to the negotiations carried out by Europe as a whole in the renegotiations of the MFA, which overall has produced what has been described by hon. Members on both sides of the House as a very satisfactory agreement, a very useful package, which we most feverently hope and believe will be helpful to the British textile industry.
I should like for a moment to comment on a remark made by the hon. Member for Rossendale. I think that he was a little unfair to my hon. Friend the Member for Hertfordshire, South (Mr. Parkinson), who opened for the Opposition, and to my hon. Friend the Member for St. Ives (Mr. Nott). Although I have not been elevated to the Opposition Front Bench, or even to the second echelon of Opposition Front Bench speakers on trade, employment or industrial matters, I believe that in a small way I have had some influence on my colleagues who have responsibility for these matters. I therefore think that the hon. Member for Rossendale was very unfair in saying that my colleagues in the House were advancing a particular policy merely for electoral reasons. I am delighted that I am joined in this view by my hon. Friend the Member for Pudsey (Mr. Shaw), who, together with my hon. Friend the Member for Bosworth (Mr. Butler), was instrumental in producing a paper which led my hon. Friend the Member for St. Ives to make the proposals that he made during the debate in February 1977.
Although I do not sit on the Opposition Front Bench, I hope that I have some influence on my colleagues, having taken a very serious interest in all textile matters. I feel that the hon. Member for Rossendale was somewhat unfair in doubting the sincerity of the proposals put forward by the Conservative Opposition in the House. Having said that, however, I remain deeply concerned about the position of the textile industry in this country, despite the renegotiated MFA.
It has been mentioned that Tootal, a very substantial employer in the textile industry, has sadly been forced to make a number of redundancies. Only a few weeks ago in this House I raised a matter relating to Tootal, which had closed a mill in my constituency, although it had indicated two or three years earlier that the production in that mill was likely to continue in my town of Congleton well beyond the end of the century. But reorganisation and rationalisation of the industry have meant that the company pulled out production from Condura Fabrics in Congelton and moved it up to Cumbria, where it no doubts benefits the constituency of my hon. Friend the Member for Workington (Mr. Page).
This clearly shows that the MFA has not as yet had any marked effect upon textiles, and the very serious situation that we have been experiencing in recent years continues. Unemployment in the industry is going up. Mills are closing. Although investment has been made, we still face very unfair competition.
One of the main areas of importance is the monitoring of the surveillance which is all part of the MFA. As has been so clearly stated by a number of speakers in the debate, it is no good the United Kingdom having a 16-day reporting record if the Netherlands, Italy, Germany or France cannot supply the vital information in or about that time. The Netherlands at the moment is expected to have delays of about six or seven weeks, and Italy eight to 10 weeks, but, as the Minister said, perhaps that is not totally surprising. For the Irish Republic and Belgium the time is within four weeks, provided that special arrangements are made. For West Germany, 28 days is regarded as acceptable, and the delay for Denmark, 24 to 30 days, is also acceptable, as is that for France, 25 days. The United Kingdom is at the top of the league with 16 days. If we can do it, I do not see why the other members of the EEC cannot also achieve that result.
I share the view expressed by the hon. Member for Farnworth that we were a little disappointed in the Minister's reaction to this matter when he spoke for the Government earlier in the debate. I hope that the Minister will take note of this point and ensure, through the various bodies, organisations, committees and


commissions that exist within the EEC that the countries which comprise Europe will tighten up on this matter and provide this vital data very much faster, in order that the surveillance can be effective.
This is an important debate. It is not only about the existing MFA and whether that will work. It enables hon. Members who serve textile areas to put forward their concern on behalf of the industry and to say how they see things developing in the future.
I very much share the views expressed by Labour Members about the performance of the industry and the extent of rationalisation that has taken place. My hon. Friend the Member for Hertfordshire, South paid tribute to the industry for its fine industrial relations record and its fine record with regard to exports. It is a major industry, but it has suffered for years from what I can only describe as unfair competition. We are not after protection for a lame duck industry. We are not after protection for an industry which has not rationalised or invested with the most up-to-date, technologically advanced equipment and machinery. We are not trying to protect an industry where the trade unions are on strike every other week. This industry has a fine record in all these areas. Tonight we are expressing our concern that the MFA, as it has been renegotiated, may not be sufficient to ensure the future of an industry for which I have considerable admiration and respect.
I am concerned about surveillance because that is really the linchpin of whether the MFA, as it has been renegotiated, will be successful. There are a number of other matters to which I could have turned my attention, particularly the quota coverage. The hon. Member for Rochdale (Mr. Smith) was right to highlight that and other matters.
However, it is worth repeating what the Minister said. About 86 per cent. of the United Kingdom's low-cost imports of textiles and clothing are now covered by MFA quotas. The figure would be increased, and is increased, to 98 per cent. if State trading suppliers and potential new quotas under the trigger mechanism

are also included. It is perhaps also worth pointing out—again, this is where the EEC can take some credit—that the EEC has introduced a new product categorisation providing a sub-division of some 120 items compared with only 60 items under the previous arrangement. That means that MFA can be very much more flexible and that it will cover many more items which perhaps escaped under the old situation.
The hon. Member for Rochdale was absolutely right to refer to growth rate. I should like to mention the excellent document produced by the Textile Industry Support Campaign entitled "Why Buy British? Jobs! That's Why". It asks "What is the answer?" and summarises the key concerns as follows:
Annual growth rate of our domestic market is less than one per cent. It is essential that the import growth rate be brought into alignment with the growth of the domestic market
The hon. Member for Rochdale made that point and I believe that he was right to do so. It seems irrelevant, stupid and irresponsible if the MFA as renegotiated allows for growth rates of 6 per cent., 7 per cent. and 8 per cent.—in the case of woven shirts there is likely to be a 10 per cent. increase—between 1977 and 1978. If our own home market has a growth rate of only 1 per cent., we are further and further eroding our own home market, which is vital if our home textile industry is to continue to produce the fine export record which it has achieved in the past.
This has been a useful debate. I am pleased to have contributed to it. I hope that the strong stand which has been adopted in the past will continue in the future in order to guarantee the success and prosperity of the 800,000 people who work in this excellent industry.

10.10 p.m.

Mr. Dan Jones: My first act in rising to my feet is to look at the clock. In deference to Mr. Speaker's appeal, I hope to conclude what I have to say in five or six minutes.
Partisan politics to one side it is always a pleasure to be called immediately


after the hon. Member for Macclesfield (Mr. Winterton) in a textile debate. He has made a herculean effort to help the people concerned, and I follow his example in supporting the industry.
I at any rate congratulate the Government on their efforts within the EEC. I am not unaware that this achievement has been stimulated by members of the present Government. Full marks must go to them. They have done a splendid job and if they build on what they have achieved we can look forward to a greater period of industrial stability in the industry.
I want briefly to refer to the speech today of my right hon. Friend the Chancellor of the Exchequer, in the course of which he spoke of the future economy of the nation. It was significant to those of us who understand industrial economics as distinct from financial economics that my right hon. Friend was saying that the ability of this country to export in the future would be a very valuable contributory factor in preserving the economic equilibrium of the nation and that any failure to do so might return us to the situation from which we have just emerged of high inflation and the ugly possibility of even more unemployment.
I feel sometimes that our Ministers have the right aims in mind without quite knowing how to achieve them. I could go on for some time about the engineering industry, in which I worked, and about the lack of apprentices there. However, this is not the occasion for doing that. But I hope that all of us who have been involved in textiles for some time will pay homage to my hon. Friend the Member for Rossendale (Mr. Noble), who perhaps stole a little too much time tonight but who nevertheless for years has devoted a great deal of intelligent effort to this industry, and I feel that we should thank him for doing so.
I have certain misgivings about the Mediterranean countries, and I hope that the problem which appears to be arising there will be tackled in precisely the same way as that in the other low-cost countries. If we do that, we really have a better situation before us. If we do as well in this concord with the EEC as the EEC has done for itself, it will not be a bad job at the end of the day.
We have heard references to the steel industry and to the automobile industry. They are industries which have been assisted financially on an extremely generous scale. I do not ask for a penny for the textile industry, but I should like to see a fairly substantial sum of Government money devoted to propagating the British textile industry with our major buyers.
I sometimes ask myself how much people like Harrods, Derry and Toms, Selfridges and others spend on British textiles and how much they spend in Switzerland, for instance, where they can get a fashionable name attached to their products. I hazard a guess that they spend more on the Continent than they do in this country for precisely that reason. That is why I urge the Government to spend money on propagating a cause which is fully entitled to it.
I have in mind the occasion in 1948 when my right hon. Friend the Member for Blackburn (Mrs. Castle) and the late Sir Stafford Cripps came to Burnley and begged the people to hold firm to textiles. At the time there was a great deal of foot-loose industry, but the people responded. I am loth to quote the old cliche that the nation's bread hangs on Lancashire's thread, because it rings a bit bloody empty now. But the people of that old Lancashire town responded to the appeal and turned their backs on foot-loose industry. Now it is time for the Government to appreciate that in a practical way and spend some millions of pounds on propagating the value of the British textile industry and its comparability with anything that can be done abroad.
That is the kind of contribution that the industry makes. It has helped the EEC in the MFA and it keeps a tight control on Mediterranean countries. It has spent money propagating the sale of British goods in line with the observations made by the Chancellor this afternoon. I am certain that it has a damned sight better future now than it had during the years when it was sustained under the sometimes intolerable hardships of the 1960s. The Government have started to do a decent job of work. If they continue, they will do a rich service to the textile industry, which has been of great value to this country.

10.17 p.m.

Mr. James Lamond: This has been an extremely interesting debate. However, it seems that we discuss textiles either just before Christmas or on the evening after the Budget Statement—times when the remarks of hon. Members will receive the minimum publicity. Nevertheless, it is still important that we should have this debate.
It has been interesting to note the way in which one or two hon. Members have attempted to use the debate as a vehicle to lavish praise upon the EEC. The ears of my hon. Friend the Under-Secretary of State for Industry have been burning red with anger as he has listened to all the praise being given, unjustly perhaps, to other members of the EEC. I think that we could have made better arrangements operating on our own—

Mr. Cryer: Pour it on.

Mr. Speaker: Order. I do not think anyone knows what is wrong.

Mr. Lamond: Well, Mr. Speaker, I am quite prepared to hear you calling me to order, but I am rather surprised to hear the Under-Secretary doing so.

Mr. Cryer: I did not. I said "Pour it on", which is an Australian expression.

Mr. Lamond: The fact is that a very large proportion of the textile industry within the EEC is to be found in Britain. Therefore, as with the CAP, we have a particular interest in it because it affects us more strongly than any other member State.
I think that we could have struck a better bargain had we been outside the EEC. Of course, that is a matter for conjecture and no one will ever know the answer to that. We have achieved a new Multi-Fibre Arrangement which hon. Members have generally praised. But there are certain drawbacks. The hon. Member for Rochdale (Mr. Smith) has drawn attention to these, and almost every complaint put to us by the industry has been aired tonight.
I am sure that the Minister will say something about other Government measures to help the textile industry. I hope that he will mention the TES, which has

been most useful to textiles particularly. I quote from the remarks of Mr. John Longworth, the secretary of the textile industry support campaign, who said recently that he could not stress too strongly that in his opinion the TES was the most effective preserver of jobs that had ever been devised. He did not write that without thinking about it carefully. We should all recognise the importance of that sentence in his letter to me.
I am very glad that the Government were able to announce recently the extension of TES for a further period and the strengthening of TES to include the new areas and to assist firms to which TES is available but which have exhausted it. All those things are very important for textiles. The Government should be thanked and praised for what they have done in that respect.

Mr. Nicholas Winterton: Is the hon. Gentleman able to tell the House how many jobs are supported by TES in the textile industry? From my researches in my constituency, I am amazed at the number of jobs in textiles and allied industries which are supported by TES.

Mr. Lamond: I should not like to put an exact figure on it. As has been mentioned by the Opposition Front Bench, the textile industry covers a multitude of industries, including garment manufacture and all the rest, but it must run into tens of thousands, if not hundreds of thousands, in the textile industry as a whole. It is, therefore, extremely valuable.
I want to say something about what I hope the Government will do in the future. They have exerted a supreme effort. They have obtained the MFA. They will not sit back. We are assured of that. There is much to be done in tightening up the surveillance and so on. I believe that the fair competition which is mentioned in the documents includes obtaining in the countries which compete against us the same sort of safety conditions, working hours and wages as we have in this country. For that purpose, in my opinion strong trade unions are necessary in all the competing countries.
I realise that so many countries are covered by the arrangement that it is impossible for our Government to see that the correct provisions are applied in those countries for the development of trade unions, but there is one country


which exports a great deal to us—namely, the Crown colony of Hong Kong. I should like to draw attention to the fact that the Foreign Office has commissioned Professor Turner to prepare a study of labour relations in Hong Kong. Many of us are awaiting publication of that report with keen interest, as are many of the textile unions in this country. We want to see the opportunity given at least for textile workers in Hong Kong to be able to organise themselves in trade unions.
A number of papers have been prepared for submission to Professor Turner by organisations of one kind or another, including Chinese, in Hong Kong which are already trying to organise unions, and trade unions in this country have given him the benefit of their thoughts. In those papers they have revealed conditions which I think would be intolerable to most hon. Members. For instance, until recently no trade union was permitted to have a full-time organiser, and many possible trade union members in Hong Kong are fearful of joining trade unions and becoming organised in case they are labelled as trouble-makers and deported back to the Chinese People's Republic because of their activity. With threats of that kind hanging over their heads, there is great difficulty in organising trade unions. I hope that the Government will turn their attention to this matter.
With those remarks, and joining with my colleagues in congratulating the Government on what they have already achieved, I hope that they will have regard to what I have said and will study the matter more closely.

10.25 p.m.

Mr. Max Madden: Enthusiastic supporters of the Common Market, who in this House are often referred to as Euro-fanatics, have been extremely busy in this debate. I view membership of the Common Market in the same way as I view the man who was found bashing his head against a brick wall. Asked why he did it, he replied "It is so nice when I stop."
I think that the same can be said of the difficulties which EEC membership has imposed on the British textile industry. It is remark able in this debate how supporters of the EEC, when con-

cronted with difficulties which membership has imposed on the British textile industry, try to claim whatever credit they think they can derive for the Common Market.
We all remember—and this applies to those who are listening to this debate—that the outcome of the Multi-Fibre Arrangement was secured not because of enthusiastic support by the Common Market but at the insistence over months and months by British Ministers who pressed the Common Market for a much tougher negotiating position than it was initially prepared to adopt. Therefore, in my view no credit can be given to the Common Market for the outcome of the MFA negotiations for Britain.
Equally, we must remember that the temporary employment subsidy, which has played such an important part in helping and safeguarding employment in the British textile industry, is being removed next year, again under pressure from the Common Market. That also must be seen as a serious setback to the British textile industry—a setback which has arisen as a result of pressure from the Common Market.
Finally, there has been mention in this debate, not for the first time, of the need for much more effective action on dumping. We must remind everybody that primary responsibility for taking action against dumping now rests with the European Commission and that Britain is no longer a free and independent agent on dumping matters. All these difficulties which have arisen as a result of Common Market membership must be seen clearly by all sides of the British textile industry, and I know that they are clearly recognised by many workers in the industry.
The British Textile Confederation, in a letter which it sent to many hon. Members, has been referred to several times in the debate. I should like to refer to a part of that letter which highlights the three main areas of concern felt by the confederation. The first is that in 1978 substantial growth of imports can take place before quotas begin to bite. Secondly, the confederation is concerned that the arrangements with the Mediterranean countries, including Turkey, Greece, Tunisia, Morocco, Spain and Portugal, offer a potential loophole. Thirdly, it is concerned about the effectiveness of the agreements, which are


dependent on rapid monitoring of imports and rapid corrective action when necessary.
A number of hon. Members in this debate have expressed serious doubt and concern about the effectiveness of the current arrangements. I shall not dwell on those arguments. I hope that in replying to the debate my hon. Friend the Minister will be able to concentrate on what I believe should be the major issue flowing from it—namely, the question "What is the strategy for the European textile industry in the next 10 years?"
I believe that the MFA must be seen as an important foundation in that strategy, and I wish to endorse the remarks made by my hon. Friend the Member for Rossendale (Mr. Noble), who has saved me a considerable area of argument because he has pointed to the serious concern which exists. Whatever the source of the figures, it is beyond argument that there are leading and influential figures within the Common Market and the Commission who see a rapid decline of the European textile industry, with massive redundancies. Figures as high as 1 million, 1½ million and 1¾ million have been suggested.
We must recognise that Britain is the largest textile country in the Common Market. We have the largest share of the industry and the largest number of employees, and traditionally we have borne the largest amount of imports. Therefore our involvement, concern and interest in this matter are very much greater than exist in the rest of the Common Market countries.
There are often conflicting self-interest groups in the Common Market, and we must recognise that we face a prospect that is not faced by many other EEC countries. We must have the greatest concern and involvement in these matters, and I should like to hear from the Minister what position the Government will be adopting in the discussions on the textile industry which must inevitably take place in the foreseeable future.
My hon. Friend the Member for Bradford, North (Mr. Ford) expressed the concern that exists about woollen and worsted imports from the Argentine. In

terms of quality, weight and design, these imports are coming in at anything up to 50 per cent. less than the cost of production in this country. I and the British woollen and worsted manufacturers would like to know what prospects there are of an early countervailing duty being imposed on these imports, which clearly are subsidised and represent grossly unfair competition.
In addition, what is being done about Japanese imports and the prospect of still more imports from that country? I understand that in the past few days China has signed a five-year trading agreement with the Common Market. What implication does this have for the British textile industry, what imports of textiles can we expect from China and, in return, what efforts are the Departments of Industry and Trade taking to ensure that we get some trade with China as a result of this agreement?
I should also like to know what success the Government are having in their extensive discussions with the Americans on reducing the effective 50 per cent. tariff which British wool exporters face when exporting to America. This very high tariff is extremely unfair and we can see no need for it. If the American desire for freer trade is genuine, we expect an early response from the American authorities towards reducing this very high tariff against British goods.
Arguments are often advanced by those who oppose selective import controls that these controls would deny the British people sources of cheap goods, including textiles and clothing. But many of us, when we see these supposedly cheap imported textile goods in the shops, find that they are not as cheap as they should be and we wonder where all the money is going.
Does the Minister accept that the time has come for an investigation, perhaps by the Price Commission, into the profit levels of importers, wholesalers and retailers who specialise in imported textiles and clothing? It would be extremely interesting to see the extent of British involvement in imports of this sort and the extent to which profiteering is taking place. It would be a helpful study. Is the Minister prepared to make representations to his right hon. Friends along those lines?
Workers and management in the textile industry regard the MFA as a useful advance but are not sanguine or complacent about the protection it offers. They realise that it will be only as good as the machinery to achieve its objectives is capable of being worked. There are considerable doubts about the effectiveness of the existing monitoring arrangement, and there is great cynicism. It is believed that the British are the last gentlemen left in Europe, and certainly in terms of textiles and clothing. It is believed that we are the people who observe the letter of each and every agreement, the people who always say and do what we say we shall do, who do the decent thing and who at the end of the day always seem to come off worst in trading agreements.
The time has been reached when we must say firmly to our so-called European partners, and to many other countries with whom we have agreements, that we want agreements that stick, agreements that are mutually observed and agreements that everybody observes. There is growing hostility and cynicism without our textile industry about the extent to which many of those against whom we are competing are genuine and honest in these matters. There are many stories that every hon. Member has heard from textile manufacturers and textile trade unionists about the loopholes, devices and manoeuvres to which our competitors resort. They are prepared to sign the agreements and to say that they will observe them, but in reality, in day-to-day competition with us, they do not observe the agreements. We should be much more alert and aware of the problems.
To return to the European strategy, my hon. Friend the Under-Secretary of State must recognise that there is great determination among textile unions to take a much more aggressive and involved position than they have done hitherto. I look forward very much to that new approach. It is only in co-operation and joint action with European trade unions that we can get effective protection for our industry, which I believe is of paramount importance. I hope to hear from my hon. Friend what assistance he is offering the trade unions and the industry to ensure that that sort of move is initiated and that every possible support is

given to those who wish to see an effective and realistic European textile strategy evolved, and evolved quickly.

10.38 p.m.

Mr. Giles Shaw: In following the hon. Member for Sowerby (Mr. Madden), I am conscious that in many of his remarks about the EEC I cannot share his opinion. That will come as no surprise to him or to other hon. Members.
It is somewhat sterile that in a debate on textiles in the light of the MFA we should spend so much time determining whether the EEC has played fair on the issue or whether we might have done better outside the Community. The facts are that we are within the Community and we are staying within it. The sooner we learn to abide within the Community and to fight hard from our own corner, the better. It is right that Labour Members have given due credit to the Ministers concerned in the negotiations for the stout ring that they held as regards the MFA. We shall be as good within the Community as the commitment of our Government seeks, and for no other reason.
If we can find good cause for saying to our partners in the EEC that there is a strong national interest that we shall see is protected, in the end good sense will triumph and we shall obtain protection for our national interest. As regards the textile negotiations, I feel certain that the strong effort put in first by the industry's representatives—I think all hon. Members recognise that the British Textile Confederation and, in my neck of the woods, in Yorkshire the wool textile delegation has been able to put a totally united view to the Department concerned primarily with the negotiations—has helped immensely to strengthen the hand of the British Government in their negotiations with our Community colleagues. Do not let us start casting aspersions about whether the EEC did us proud. The important thing is that we have arrived at the MFA negotiation, which is a stepping-stone to the future of the industries that we all seek to represent.
I come now to the major points in the debate. It seems that there are three major concerns for all hon. Members, and they cut across all party lines. The first is the anxiety about monitoring or surveillance procedures. This stems from a long history of doubt about whether


the mechanisms currently available to provide the Government with the information they seek are sensitive enough to provide that information early enough for action to be taken which can prevent a difficult situation becoming critical.
I refer, for example, to the position on clothing imports last year or 18 months ago. It took a great deal of time before there was sufficient evidence available under the anti-dumping procedures to enable the case to be made. The Under-Secretary of State played a strong and excellent part, but he would be the first to admit that it took a long time for the information to be made available to allow the case to be made. By that time, many clothing companies had already suffered irreparable damage.
When we bring matters up to date and look at certain other textile import problems—the hon. Member for Bradford, North (Mr. Ford) raised the question of Argentine wool cloth imports, as did the hon. Member for Sowerby (Mr. Madden)—the question that we have to ask is, what is the minimum amount of information that the Department requires to make use of the powers that it possesses to prevent what appears to be a dangerous situation from becoming critical?
We are not interested in being able to prove beyond peradventure that it will cause damage. The causing of damage, in order to prove it, means irreparable damage. Therefore, we would have to prove to the Department of Trade that so many hundred jobs had been lost or that five, six or seven companies had gone bankrupt and the situation had become virtually intolerable.
I am sure that the Government recognise that that is asking for too much. What we have to establish with the Minister, and he with our colleagues within the EEC, is the minimum requirement of information that will enable the Government to use the powers at their disposal either to take countervailing action or, with the co-operation of the EEC, to start taking action throughout the Community. I think that the Under-Secretary of State in his reply might suggest the minimum terms required, because we cannot allow ourselves to wait and see companies go to the wall before action is taken.
My first point is that monitoring and surveillance are all very well as a concept, but we need that concept defined in such a way that the industry can have some confidence that it is a practical solution to bankruptcy. If in the end bankruptcy has to come before we can provide countervailing measures, that is no good to any hon. Member.
Secondly, there is the question of opening other markets. Hon. Members have rightly suggested that we should look beyond the MFA, which is a useful and important milestone in the control of imports, to the more positive side of our trading initiatives. What steps can the Community take or can we take unilaterally to start to make other markets available to the United Kingdom's textile industry?
This country faces severe tariff barriers at the gates of many of the world's most important developing markets. Reference has already been made to the stringent tariffs on wool fabrics in the United States. It is ludicrous for the Prime Minister and President Carter to discuss the liberalisation of world trade if they cannot get down to some nitty-gritty detail as to where United Kingdom interests would be best served. I can think of no single change which would benefit the wool textile industry more than for some sensible concession to be made concerning the virtual 50 per cent. duty imposed by the United States on the importation of British manufactured wool cloth. I hope that we might get some indication that that kind of item is on the shopping list of discussion with the United States.
It is not only the United States, though that is easily the most developed market which denies access in competitive terms, but Brazil, with its 205 per cent. duty on cottons and on woollens. What steps are being taken by the Government to try to liberalise trade into South America? These markets must have a major part to play in the development of our wool textile industry. The South Koreans have an 80 per cent. tariff on imports into their country.
Those countries have in recent years exported a substantial amount to us. British consumers have certainly done more than their fair share to provide an adequate market for Korean merchandise. But, with an 80 per cent. tariff against us in that country, what chance do we have


of making a reciprocal trading arrangement that makes competitive sense? These are the kinds of questions we should be asking ourselves in considering where we can open up new markets for our textiles. I suspect that it is only with new markets that we can look forward to a developing future for our industry.
I turn now to the need for flexibility in the management of our textile companies. I make no apology for standing four square behind the record of the wool textile industry in this regard. Through historical accident it has developed into a wide range of small manufacturing units, which allows them to be extremely flexible over design and type. In my constituency, companies which have been denied traditional outlets for their material have diversified rapidly into such things as billiard cloth or piano felt. One has become a large wholesaler of caravans in addition to the textile operation. These companies have shown great skill for diversity. It is no use this House taking views on the future of the industry without recognising that there will be no future unless there is flexibility in the management of the companies. They must be encouraged to be entrepreneurial, which was the reason for their creation.
Today's Budget and the changes that the Chancellor is proposing for small businesses are good stuff for the woollen textile industry because most of the companies are small businesses and many of them are family businesses. But flexibility of design and of marketing and a branching out into allied industry, if that is possible, are encouraging aspects which should be well understood in the industry.
In the context of the EEC documents, we must draw two conclusions. First, the MFA negotiations have been successfully concluded as a result of strong British Government and industry pressure backed up by hon. Members in this House. We cannot expect the Community to do our job for us. We must do it ourselves. But the MFA is merely a staging post through which the development of textiles is to proceed. What really counts is the second conclusion, namely, that the future of the textile industry will always be as good as the management and entrepreneurial flare of those industries.
I fully understand the anxieties expressed about the numbers of jobs and about TES and other aids which are available to allow persons to continue to be employed in the industry. But those aids cannot guarantee that the industry's products are updated to meet the demands of the market or that the price of its products will be competitive enough to take business off the South Koreans or the Taiwanese. They certainly cannot guarantee that ultimately management is sufficiently quick on its feet to make the right decisions to ensure that truly competitive products are marketed. The industry's potential is crucial to the economic well-being of the nation.
This point was well taken in the 1978 progress report of the Wool Textile EDC, which made it clear that it wanted the Government to
strive for a substantial reduction in the US tariff on wool cloth … The Government should be prepared to negotiate on EEC textile tariffs only if US textile tariffs are included in the negotiations.
It continued:
The EDC welcomes the market entry scheme, but recommends that the Government reconsider the decision to put back on BOTB support for joint ventures.
I would like to see a greater development on the exporting front to encourage this industry and to make certain that it can take advantage of any trading opportunities that can be created.
The impetus will come, certainly, within the Community if it provides a more stable base from which the home industry can regenerate itself. The structural position of the wool textile industry in particular is sounder today than it ever has been. The Section 8 changes have largely gone through. The shake-out—be it of unwanted plant, of poor management or, tragically, of additional employment—has already taken place. Certainly the wool textile sector is now better poised to take full advantage of marketing opportunities than at any time before.
What we really require is a feeling not only that the Government will act on our behalf on the MFA to prevent wholesale penetration from unfair competition—no one in the wool textile industry is frightened of fair competition—but that the Government will use their endeavours to see that other countries likewise start


reducing their tariffs against imported woollen material.

10.51 p.m.

The Under-Secretary of State for Industry (Mr. Bob Cryer): This has been a thoroughly worthwhile and interesting debate. Many hon. Members have displayed a great deal of knowledge. For myself, particularly as a Member representing part of the textile industry in a woollen textile area, I have been very pleased to listen to the debate and all the valid points that have been made.
I welcome the Conservative Party's support for the MFA. I well recall, when I did not hold my present position as a pillar of the Establishment, that many Labour Members were pressing very heavily for a tough line on the whole of the textile industry, and that the Conservative Opposition were somewhat divided about the position. I am pleased that they appear to have moved some slight way in the direction of the Labour Party and the Labour Government.
The hon. Member for Hertfordshire, South (Mr. Parkinson) raised a number of points which I should like to answer. The first was the question of surveillance and making the agreement stick. I shall elaborate a little on the method of surveillance shortly, but certainly we want to ensure that the agreement will stick. We shall use our very best endeavours with the Commission to ensure that what the Commission has said it carries out.
One of the points that I made in an intervention was to the effect that certainly the Commission's policy and its implementation was to a significant degree brought about by the pressure from the Government. One recalls, for example, that in October last year the negotiations did not start because the Government prevented the Commissioners from embarking on the negotiations until it was made absolutely clear that the mandate would be adhered to.
I am not making any great praise of the Government. It is simply a question of fact that it is not something that the Commission has achieved by itself. The Commission achieved it only because we brought pressure to near on it to stick to the mandate to the end. It was certainly a very difficult job, both for the

Ministers and for the civil servants, who, day after day and night after night, had to follow the negotiations, because clearly they were at second hand, and to keep a check on them in order to make sure that the mandate was being followed.
Therefore, certainly after that background, we have no intention of allowing the agreement to slip through our fingers.
On the question of the price clause, raised by the hon. Member for Hertfordshire, South, my hon. Friend the Under-Secretary of State for Trade, when he intervened, was taking the question on the basis of anti-dumping, not on a price clause. But only the agreement with Roumania contains a price clause. Suits from Eastern Europe are, of course, covered by voluntary price undertakings. It should be added that the quota on Romanian suits has been reduced from 384,000 in 1977 to 281,000 in 1978. We are not happy about the price clause, but it was introduced by the Commission very late in the negotiations with Roumania, with very little consultation. We are examining the position.
I was very pleased that the hon. Member concluded with the phrase that the industry now has an opportunity to plan its future. That is, in fact, an attitude that commands our support. We want a much greater element of planning in industry across the board. I very much hope that, in view of his attitude, the hon. Member will encourage firms such as Courtaulds, mentioned by my hon. Friend the Member for Rossendale (Mr. Noble), to enter into a planning agreement, because only in that way can we compete internationally with our world-wide competitors.
I was also pleased that the hon. Member for Pudsey (Mr. Shaw) took note of the measures to aid small firms and mentioned, quite correctly, that quite a large number of West Riding textile firms will benefit from these measures. Certainly I hope that firms right across the board will benefit, in both the cotton textile industry and the West Riding woollen textile industry.
On the question of monitoring and surveillance, I emphasise, first, that the Department of Trade itself carries out surveillance at present. But we expect that there will be three separate systems, comprising one of the Commission, one of


the United Kingdom textile industry and what is termed a Whitehall system. The industry system is being formulated. The Commission system should be ready very shortly. The Whitehall system should be fully operational thereafter.
A separate Whitehall monitoring and surveillance system is necessary as an independent check on the other systems and as an objective basis for Government action. The surveillance system that I am talking about will be very sophisticated. It will be computer-based and will operate on the principle that "alarm bells" will start ringing when imports approach restraint levels. Information will be provided automatically.
The setting up of such a system from scratch is a complex task, but it is well under way. Until the system is fully operational departments will continue to monitor by manual calculation imports of sensitive products and imports from sensitive sources. Already the United Kingdom has alerted the Commission to some cases where the limits seem to be under threat.
We have indicated clearly to the Commission our concern that delays in statistics from some member States should not delay Community action. The Commission has shown itself sensitive to this problem and has indicated that it is considering ways of overcoming it—for example, by extrapolating from firm figures to cover the necessary period. We would very much welcome positive pressure from Comitextil to improve statistical information in all member States.

Mr. Giles Shaw: I trust that the Minister will forgive me if I suggest that what he has described seems to be a labyrinth of systems. Would the industry concerned—or the sector of the industry concerned in relation to textiles, be it cotton or woollen textiles—have some say in the threshold at which the alarm bells start ringing?

Mr. Cryer: The threshold has already been generally decided under the agreement. We have worked very closely with the industry through all the negotiations and are currently working closely with the industry in the establishment of the industry system of surveillance and monitoring. So basically the answer is, yes, we are working closely with the industry.
While the hon. Gentleman is right in saying that there is a certain element of labyrinthine complexity to it, that is not entirely unknown within the EEC. As he pointed out, we are members of the EEC, and it looks as though we shall have to live with some of its disadvantages, some of which my hon. Friends have mentioned. It may be that we shall try to improve on them the whole time.
My hon. Friend the Member for Bradford, North (Mr. Ford) asked a number of questions. He asked whether the Government would press for the triggering of quotas. The answer is, yes, we shall. Where quota levels have been nearing the limit we have brought this to the Commission's attention.
My hon. Friend also asked whether action would be taken against non-bilateral-agreement countries. The Commission has stated that countries which have not signed a bilateral agreement will be subject to the same kind of safeguard procedures as those which have signed an agreement. We shall look to the Commission to fulfil this declaration to the full.
My hon. Friend also raised the question of Argentina. I know that the industry has expressed concern about the matter. It is a little complicated, in that import penetration for all types of wool cloth is only 4·3 per cent. and Argentina's share of the United Kingdom market is only 1 per cent. That could make it difficult to justify a request for consultations at this stage.
However, I recognise that the main difficulty for the United Kingdom market is caused by imports of medium weight worsted cloth. There are two main points on which we are taking action. First, a quota case is being made out for the medium weight worsteds. That is important, but we have to satisfy the Commission that the imports in a particular sector are damaging and intrusive when the general importation level across the board is so low.
There have been some complaints about a 25 per cent. export subsidy which the industry claims is being operated by Argentina. Officials have discussed this in detail with the industry and are at present considering whether a case can be made to the Commission for antidumping or countervailing action. So we are taking action on the matter. We


regard it as important, but, as in all such cases, we must present a case to the Commission. The Commission cannot simply accept our claim: it must be substantiated. However, this is a matter of great concern. As a Bradford Member, my hon. Friend will know how important it is to his area.
The hon. Member for Harrow, East (Mr. Dykes) and my hon. Friend the Member for Farnworth (Mr. Roper) gave great credit to the Commission. I have answered them by explaining how we presented a very hard case and, I think, encouraged the Commission to adopt a firmer stance. But my hon. Friend and others also mentioned the ILO report quoted in The Guardian today. The hon. Member for Macclesfield (Mr. Winterton) mentioned the rumours which have been circulating. They cause great anxiety.
In October 1977, Mr. Christopher Tugendhat said:
The Commission is examining ways in which the Community can assist the industry to restructure itself during the breathing space which a restriction on imports will create. Some of this restructuring can take the form of improving efficiency and of concentrating our textiles resources more on those parts of the industry where our competitiveness is good. Inevitably, however, restructuring is likely to mean an overall reduction in capacity, which means that some textile workers will have to be found jobs in other industrial sectors. The Commission recognises the difficulties of this and therefore intends to submit to the Council of Ministers as soon as possible proposals which will assist the textile sector to restructure. Among other things, these proposals will cover the co-ordination of the measures taken by individual member States, the intensified use of the Community's financial instruments and the promotion of appropriate scientific and technological research.
I did not regard that speech as particularly helpful in the context of the reports and counter-reports and the rumours that the hon. Member for Macclesfield mentioned. It is not helpful if a Commissioner goes to Rochdale or anywhere else and makes speeches about "restructuring the industry" and "the pace of technological innovation". Those words send cold shivers down the necks of textile workers because they have heard them so many times.
I remember the cotton textile reorganisation scheme in 1959 which was going

to clear up that industry in Lancashire. A little technological development and improvement was going to end all the industry's problems. Yet, thousands of lost jobs and hundreds of mill closures later, people are still making that sort of comment. It is not particularly helpful. The Commission has not yet put forward any formal proposals but I understand that it is proposing to recruit extra staff to undertake the work.

Mr. Roper: I asked my hon. Friend a specific question about the ILO conference, which has nothing to do with the European Economic Community. But will he please investigate that report—the British Government are a member of the ILO and are represented at its conferences—and make sure that we get some background information as to the basis for the report?

Mr. Cryer: Certainly. We are concerned. It is only a very recent report, which we have not seen, but we shall examine it very seriously.

Mr. Madden: While doing that, will my hon. Friend also contact Mr. Tugendhat to ask him which industries he believes will be in a position to offer jobs to redundant workers, whether from the textile industry or any other industry?

Mr. Cryer: The point raised by my hon. Friend the Member for Sowerby (Mr. Madden) is an interesting one. One cannot speak of an industry in isolation, particularly with a total level of unemployment of about 1.5 million. Where people are threatened with restructuring, they like to see jobs available so that they can be restructured into some gainful employment. My hon. Friend's point is very relevant.
The main United Kingdom concern is that member States must be fully consulted by the Commission at every stage of the development of a Community policy. The Department of Industry considers that it is qute unrealistic to believe that, whatever restructuring takes place, the Community industry will be in a position, after the new MFA expires, to meet low cost competition without protection. The Department of Industry also considers that a very close watch will need to be kept on any Commission proposals for harmonisation of State aids in the textiles and clothing field which would


inevitably reduce Her Majesty's Government's freedom of manoeuvre and could have serious implications for other sectors.

Mr. Dan Jones: The Minister will know the case that I submitted to the Department of Industry in October last year. It has shuttled between the Department of Industry and the Department of Trade during the months between. I believe it has been in the Minister's own hands. People could become unemployed unless some measure of assistance is possible under the legislation relative to small firms. Will the Minister have a look at it and let me know what is likely to happen?

Mr. Cryer: I will have a look at that case, on which my hon. Friend the Member for Burnley (Mr. Jones) has expressed very great concern on a number of occasions.

Mr. Parkinson: Is the Minister aware that many of us share his reservations about this European grand design, global restructuring approach to various industries? But does he not see that it is a direct logical extension of his own Government's approach to sectoral planning and planning agreements? The logical outcome of his approach is the Christopher Tugendhat approach.

Mr. Cryer: The hon. Gentleman is stretching things a bit when he suggests that planning agreements are the basis for European-wide organisation of the industry. We have never even ventured towards that sort of activity, and the notion that, for example, because a nation State can plan its industry, a central bureaucracy should adopt the same logic and plan the whole of European industry, seems to me to be somewhat distorted.
The hon. Member for Rochdale (Mr. Smith) mentioned the drawbacks of the MFA, which are, of course, very real. They are accepted and understood, but, as he will also appreciate and understand, it was a long and difficult negotiating period. As I have explained, it meant that a large number of people were involved in pressing the Commission on a number of issues to retain the mandate, which, in our view, was extremely important. Inevitably, in a negotiating and bargaining situation, some parts are stronger than others. However, we understand

that the MFA forms a very good framework, but that framework must be built on. There are still areas where action and constant surveillance and vigilance are needed.
The hon. Member asked about Japan. The Community decided not to continue its agreement with Japan because Japan is no longer seen in general as a low cost supplier. It is worth pointing out that the British Textile Confederation's pamphlet on the future of the textile and clothing industry does not regard Japan as in general a low cost supplier. However, Japan will be covered by surveillance. If, in fact, there is a degree of penetration which is causing concern, we shall have the information and will be able to press the Commissioners to take action.
The hon. Member for Rochdale also raised the question of Turkish yarn. Certainly imports from both Greece and Turkey have this year been rather higher than we would have wished. We have reported our concern to the Commission. The levels of imports will be closely monitored, together with an arrangement with Turkey which allows for appropriate safeguard action by the EEC if levels look like being exceeded. Incidentally, discussions are taking place within the Commission with regard to Greek imports, which are in a somewhat similar position.
Both the hon. Member for Rochdale and my hon. Friend the Member for Rossendale mentioned tyres and the production of tyre fabric. I know that this has caused a great deal of concern in the industry on two points. One is the question of the importation of low cost tyres from Eastern European countries, mentioned by my hon. Friend the Member for Rossendale. He also raised the point about safety standards. I shall certainly draw to the attention of my right hon. Friend the Secretary of State for Transport what has been said. Clearly, if there is any question whatever of safety standards being below those required, they should be examined.
With regard to the production of fabric, a large source of demand from Goodyear has diminished because Goodyear has decided to place 50 per cent. of production in Luxembourg. As hon. Members will appreciate, Goodyear is a multinational concern. We cannot require it to place


its production in any particular mill in any particular area. Moreover, Luxembourg is a member of the Community. Therefore, we are not in a position to exert action over that particular source, as we would if it were outside the Community. This is a question which is causing us concern, but unfortunately we are in such a position that we can only persuade and argue but not require.

Mr. Noble: My information is that the request to Government Departments to buy British may lapse in July. Would it not be possible to re-examine any tyre purchases to ensure that tyres purchased by Government Departments, particularly such Departments as the Ministry of Defence, are manufactured entirely in this country?

Mr. Cryer: I was coming to that point. With regard to Spanish sharp practice, which my hon. Friend described, we are taking up the matter with the Commission and it is pressing the Spanish Government on this issue. This is also the case with the dumping of denim. We have asked the companies concerned to provide evidence, and we shall assist in the presentation of the case.
With regard to public purchasing policy, which this Government have emphasised, I am advised that an EEC public supplies directive comes into force on 1st July which is designed to prevent "national preferences" being given. As my hon. Friend will know, directives are not open to negotiation or argument. That is one of the difficulties which we must face in this situation. No doubt those people who are so fervently in support of the Common Market will have some ready explanation as to how we can get round that. At present that is something to which we are giving our undivided attention.

Mr. Winterton: May I suggest that perhaps the Government could have an informal agreement with Government and public bodies?

Mr. Cryer: The hon. Gentleman is suggesting that we should in some way circumvent an EEC directive. Of course, I am surprised that he should raise such a point. This is clearly a matter of concern to all of us. If the hon. Gentleman is suggesting a widespread application of

planning agreements—Conservative Members seem to want to put planning agreements all around Europe—all I can suggest is that he concentrates on getting a few in this country first.

Mr. Roper: Is the directive to which my hon. Friend referred one to which the British Government have given their agreement? It has to be agreed in the Council of Ministers, and presumably it comes into effect only if the British Government have agreed with our Community partners that it should do so.

Mr. Cryer: It is a directive which has followed the usual procedures, and this is one of the difficulties that we currently face.
My hon. Friend the Member for Rossendale referred to planning agreements, and certainly the firm which he mentioned, which I take it is Courtaulds, dominates the industry. We would welcome a planning agreement with such a large and important firm.
On the issue of the EEC document, a lame duck industry and a black list, we are always grateful to receive evidence of these influences from my hon. Friend the Member for Rossendale in order to take them up as and where necessary. These matters are of course of concern to us and, if he will provide us with this information, we shall examine it with great care.
I agree entirely with my hon. Friend the Member for Oldham, East (Mr Lamond) about working conditions in Hong Kong and elsewhere. As international Socialists, he and I and all Labour Members are concerned for working men and women throughout the world, and we want to see the system of exploitation prevailing in so many countries eroded away, with conditions being brought up to the level enjoyed by work people in this country. It is only in those conditions that fair competition can be said to exist.
My hon. Friend the Member for Sowerby mentioned a five-year trading agreement with China. I understand that this agreement is of a very general nature and that no steps have yet been taken or are envisaged to apply it in any sector. If any steps were to be taken, they would, of course, have to be in line with the Community's policy in the textile sector,


including the global import ceilings especially.
My hon. Friend also mentioned the United States tariff against our West Riding woollen industry exports. We are pressing the Commission to present a case, and it has done so in negotiations with the United States, to reduce the tariff, which is far too high, under the multilateral trade negotiations. This is under way. We are concerned because, although the West Riding woollen textile industry is doing reasonably well in America and is penetrating that export market surprisingly well despite the tariff, there is no question but that the tariff is still a severe hindrance and that we want to see it diminished.
Incidentally, I hope that my hon. Friends do not mind my use of the old-fashioned name of West Riding. I do not think that a Conservative local government Act should get rid of these names at a stroke, as it were.
My hon. Friend the Member for Oldham, East referred to the temporary employment subsidy. There is no doubt that it has been of enormous benefit to the textile and clothing industries, which are very important industries. They represent the third largest employer in the country, and this is frequently forgotten in our general discussion on industry. Some 160,000 jobs in the textile and clothing industries have been supported by TES since its inception, and this represents about 45 per cent. of all TES support.
Following a request from the EEC Commission that the scheme should be amended to ensure that textiles, clothing and footwear should not be given this degree of benefit and subsequent discussions with the Commission, the Secretary of State for Employment announced on 15th March that the TES scheme would be extended for a further 12 months but with special arrangements being made for the textiles, clothing and footwear industries.
From a date in May to be announced, new applicants for TES in these three sectors will be limited to assistance for not more than 70 per cent. of the total labour force in any establishment for the first six months and to not more than 50 per cent. for the second six months. From the same date, an interim short-time working compensation scheme will be in-

troduce for these three sectors, which is intended to compensate for any loss of TES. The interim short-time working scheme allows workers who could have been made redundant to be put on to short-time working and receive 75 per cent. of their gross pay for each day's work lost. Employers will be fully compensated by the Government for the costs involved. This scheme will also be available to those firms that have already exhausted all their allowance under TES. That is one of the most important elements for the textile industry.
The Secretary of State for Employment on the same date announced the extension of the small firms employment subsidy to firms employing up to 200 employees outside the special development areas to the development areas, intermediate areas and inner city partnership areas, which means that firms are being given a real cash inducement to take on an additional worker, and the cash grant is for 26 weeks.
On those counts, TES is very important. When the right hon. Member for Leeds, North-East (Sir K. Joseph) makes remarks about excessive subsidies and excessive support, my heart quakes for the industries that have been given strong support by TES.
It has been said that this is no time for us to be complacent. On the contrary, our vigilance must continue. We regard the new arrangements that my hon. Friend the Under-Secretary of State has described as the beginning, not the end, of a policy that will provide a significantly better regulatory framework for imports from low-cost sources over the next five years. However, it is only a framework. True, it is in many ways much more comprehensive and precise than anything that we have had in the past, but it remains a framework. How effective it will be depends on the use made of it, and I assure the House that we shall make very strong use of it. Having negotiated it with sweat and blood, we are hardly likely to ignore it.
In particular, there is, first, the need for effective monitoring and surveillance. The Commission has accepted this, and so have we. In due course, there will be, both at Community and member State level, computerised monitoring systems which will be greatly superior to those that we have had in the past.
Secondly, there is the need for speed once there is a clear case for action. The Commission has given an assurance that action, once called for, will become effective within three months. We shall be monitoring closely the speed with which action is taken.
Thirdly, there are the terms upon which new restraints and annual growth rates are agreed. We shall look to the Commission to show the same resolve in the many negotiations yet to come as it showed when negotiating the main agreements before Christmas. In all these areas we shall do our best to ensure that the new agreements are fully effective. We shall in turn, however, look to the industry to do its bit in making good use of the breathing space afforded by the new arrangements in order to become more profitable and more competitive.
There are various forms of Government financial assistance available under Sections 7 and 8 of the Industry Act 1972 for modernisation and rationalisation projects in development areas and nation-wide.
There is the selective investment scheme for bringing about major new investment projects which would not otherwise have proceeded as proposed, and the product and process development scheme to support the design and development of new products and new processes. We hope that our industries will take advantage of these schemes and the other more general forms of assistance with which hon. Members will be familiar.
In this way we hope that industry will place itself on a sounder footing for the future. The Government have worked hard to preserve the industry and to preserve jobs. We shall continue on our determined and vigilant course in the interests of working men and women in the industry, who are a vital part of the industry and whom we want to see, through all sections, bring prosperity to themselves and the country.

Question put and agreed to.

Resolved,
That this House takes note of Community Documents Nos. S/139/77, S/183/78, R/3375/77 and R/513/78 (and the Supplementary Memorandum submitted on 21st March 1978) on Community Textile Policy.

NATIONAL HEALTH SERVICE, (SOUTH-EAST KENT)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Tinn.]

11.24 p.m.

Mr. Keith Speed: I am glad to have the opportunity tonight to draw attention to the breakdown of the services to many patients in my constituency and the constituency of my hon. Friend the Member for Folkestone and Hythe (Mr. Costain), who later will seek to catch the eye of the Chair.
I wish to make it clear that my remarks in no way imply criticism of the doctors, nurses, supporting workers or administrators in the South-East Kent district, all of whom are carrying out a first-class job in most difficult circumstances. But the Minister should appreciate the background, namely, that within this district the borough of Ashford has been designated by the Kent County Council as a growth point over the next decade and in its structure plan. Indeed, already various Government Departments are being helpful by way of industrial development certificates and considerable housing, and industrial expansion is taking place within the town of Ashford itself. There are also the problems of the Shepway District Council related to the elderly population and pressures in both boroughs on the community services.
On 3rd March this year the hon. Member for Gravesend (Mr. Ovenden) initiated an Adjournment debate on the problems of the Kent Area Health Authority. He argued that within the whole of the South-East Thames Region the Kent area was worst treated. I think it is fair to summarise the Minister's reply by saying that he accepted that argument. I put it to the Minister that the two worst treated districts in the Kent area are Medway—which I understand the Minister is to visit later in the year—and South-East Kent.
The Kent Area Health Authority has received a boost to its revenue with an additional £3·3 million being made available from 1978–79 onwards. However, looking ahead, I understand that the regional health authority estimates that Kent will need an extra £38 million over


the next 10 years to equalise services throughout the region. Of this, Kent needs £12 million just to maintain standards of service to the increasing population. Thus, a serious future problem remains.
In this connection I look particularly at what the Minister had to say about the Resource Allocation Working Party—RAWP as it is called—and the Minister might be able to say a little more about the matter tonight because it is of great importance. It has been represented as a battle between the London teaching hospitals and the area health authorities further removed from London. I hope that the matter is not seen in that light. Nevertheless, there appears to be a clash.
In the Adjournment debate on 3rd March, the self-same Minister who is to reply to this debate spoke of changing
the pattern of care towards comprehensive district-based services."—[Official Report, 3rd March 1978; Vol. 945, c. 943.]
That is something I would very much wish to see. Indeed, in the South-East Kent district we could go a long way along that path if phase two of the William Harvey Hospital was proceeded with, but I shall have more to say about that in a moment.
I should like now to deal with the financial figures for the South-East Kent district. I understand that in the 1976–77 revenue allocations per head of population in the Kent Area Health Authority £35 went to Medway, £41 to South-East Kent, and £69 to Maidstone, while Tunbridge Wells, Canterbury and Thanet, and Dartford were up in the £80 per head range. The average for the South-East Thames Region was £76 per head. Therefore, South-East Kent, at £41 per head, was well below the average.
However, I accept that those are somewhat crude figures, and if we take the 1978–79 figures, adjusted for mental health and other services received—and perhaps these are more sophisticated figures and give a more accurate indication—I understand the position is that per head Medway received £44, South-East Kent £55, Maidstone £56, Dartford £70, Canterbury and Thanet £77, and Tunbridge Wells £77. Therefore, again Medway and South-East Kent are "tail end Charlie" and at the bottom of the queue in that form of measurement.
This means that the problems currently faced by my constituents in some cases are quite serious. At the beginning of this year figures given to me for normal waiting times at the hospitals in Ashford for outpatient clinics were high and in some cases rising. Seventy-nine weeks was the waiting time for seeing the orthopaedic consultant for surgery, 16 weeks for rheumatism and rehabilitation, up to nine weeks for general medicine, 20 weeks for ophthalmology, up to 31 weeks for general surgery and 12 weeks for ear, nose and throat operations. Those are waiting times to see the consultants, who are desperately overworked, and are sometimes struggling hard and are starting very early in the morning to see their patients. On top of that there is the additional waiting time for the operation. I know from personal cases of which I have had experience that if people wish to have an operation in the South-East Kent district they have to wait a number of years in the case of some specialties.
This may arise because there is a deliberate policy—this is what is happening in fact, anyway—that a significant proportion of the patients in South-East Kent should be treated either in London or in Canterbury, or outside the district. It has been brought to my attention that this is the case. The resident population of the district is 240,000, and increasing, while the catchment population is 180,000. I believe that the difference is for those who are supposed to be treated outside, far away.
The Minister will know, looking at what he said in the Adjournment debate on 3rd March and also because he is a sensible man, that the cost of public transport is growing. It means a very real burden indeed if the friends and relatives of patients have to commute from the South Coast or Ashford to London. There is almost a total lack of public transport where I live, in Rolvenden, in the borough of Ashford, and to get to Canterbury by public transport and back is a day's hike, although the actual distance may be only about 30 miles. It is an area with which you will be well acquainted, Mr. Deputy Speaker.
I believe that these waiting times contrast badly with other districts in the region. From the figures that I have had I can say that they certainly contrast badly with the waiting times in hospitals


in the London area health authorities. Apart from complaints by patients—I have had many of them—for the first time in my history as an hon. Member in this House for nine and a half years I have received complaints from general practitioners who, in desperation, have written to me asking whether anything can be done about it.
The new William Harvey Hospital is, as the Minister will understand, the linchpin of the provision for health services in the district. There are some questions that I want to ask the Minister about the hospital. First, will he confirm that phase 1, when the hospital opens, will provide only 30 extra acute beds in the district? I accept that these are high quality buildings and high quality services—but I believe that that is the situation.
Secondly, I understand that only five, or, at the most, six, operating theatres instead of the seven that were expected will be available. Is that so?
Thirdly, I understand that the 10-bed isolation ward that was originally planned is not to be opened, and that staffing submissions by all the departments in the new hospital are expected to be cut by 10 per cent. The medical photography department will not be opened, and there will be no physiotherapy department. This is quite important from the orthopaedic point of view, because I am told that patients will have to be bused from the William Harvey Hospital across the town of Ashford to the old Ashford hospital, a couple of miles, and back again, for that kind of treatment. I do not think that that is satisfactory.
I wonder whether the Minister can tell us when the opening day will be, because from articles that appeared recently in the local Press there seems to be considerable confusion. The information that I have received, from talking privately to people, is that, although the commissioning team is working flat out—I do not criticise it—I understand that it will be a further year before the first outpatients are treated at William Harvey, and it could be 18 months before the hospital is commissioned. I am sure that all my constituents and those of my hon. Friend will be most interested in any up-to-date news that the Minister can give us on that matter.
I say to the Minister with all humility—because this hospital has been planned under both Governments and I am in no way criticising him personally—that the William Harvey as it stands at the moment is only half a hospital. I wonder whether the hon. Gentleman will confirm what I understand to be the situation, that many of the services, such as power, heating, and the pathology laboratories, are designed and have the capacity for a 700-bed hospital, including phase 2.
If phase 2 went ahead, it would include high priority facilities to which the Minister and his Department quite rightly pay attention—geriatric and mental illness accommodation, rehabilitation, and the physiotherapy department that I have already referred to. If this were allowed to go ahead, it would provide a balanced hospital, good career prospects for those working in it, and a proper and comprehensive service for the 250,000 resident population in the South-East Kent district. This population increases considerably in the summer months.
Can the Minister clear up whether phase two is dead—I hope that it is not—whether it is deferred or whether we can expect that, some time in the future, it will go ahead? Any sort of definitive statement would be enormously helpful for many of my constituents inside and outside the medical profession.
My hon. Friend and I have been told on a number of occasions that when the William Harvey Hospital is opened there will be a 24-hour casualty service. I am sure that the Minister is aware that his right hon. Friend the Secretary of State for Transport has announced that work is due to start this summer on construction of the M20 motorway between Folkestone and Ashford and, within the next couple of years, on the section from Ashford to Maidstone which will then link up right through to London.
The William Harvey Hospital will be within a few hundred yards of an access point to that motorway, which will carry very heavy European traffic down to Folkestone and along to Dover, which is the biggest passenger port in the country and which is expanding fast. I see the role of the William Harvey Hospital in relation to the M20 as similar to that of the Luton and Dunstable Hospital in relation to the M1. Apart from serving constituents, it will be important for the


hospital to serve a long and busy section of motorway. I hope that the Minister can give an assurance that there will be a 24-hour casualty service and that there will be enough consultants and registrars to operate it. We shall be most concerned if that were not to go ahead.
In resources and services, the South-East Kent area has been a Cinderella for too long. I am concerned that the undoubted advantages that the William Harvey Hospital will bring may be used to stifle improvements elsewhere and that the facilities at the new hospital will not come up to earlier expectations. We heard what the Chancellor of the Exchequer said earlier about hospitals and waiting lists, and perhaps I can put in the first bid just a few hours after his Budget.
I hope that the Minister will accept that I put these suggestions and questions in a constructive and unpartisan manner, and I shall listen with very great interest to the answers he gives.

11.38 p.m.

Mr. A. P. Costain: I am grateful to my hon. Friend the Member for Ashford (Mr. Speed) for sparing me three or four minutes of his precious debating time. I heartily support all he has said. I could read out the waiting times that I was given when I telephoned local doctors today, but they are similar to those given by my hon. Friend and I shall not delay the House on them except to say that one doctor told me that there was an 18-month wait before he could get an orthopaedic case into an outpatient department for examination. That man is out of work. It is an appalling situation.
The Minister will realise that the difference in procedure at the Royal Victoria Hospital caused a great deal of concern in Folkestone. More than 20,000 people signed a petition within a week of the announcement and the petition was sent to the Minister. The Shepway District Council has put a strong case for a community hospital and the South-East Kent District Plan confirms that, but we have had no information that it will continue along those lines.
I wish to make a special plea about the casualty unit. We have a main motorway close to two of the largest passenger ports in the world, yet the accident service

closes at 5 p.m. I am afraid that my constituents are not so clever that they have accidents only between 8 a.m. and 5 p.m. The position is appalling. In the summer we have a quarter of a million people in our area. However, we do not have accident hospital facilities after 5 o'clock or 6 o'clock in the evening. After those hours it is necessary to go on to Canterbury.
Another problem is the ambulance service in Lydd. The service shuts down in the evening and the men are put on call. That situation is now being examined by the Kent county authority. I hope that we shall get some result. If we do not, I assure the Minister that I shall be coming back at him. The problem is acute, and I hope that he can give us some assurance that he is doing something about it.

11.40 p.m.

The Minister of State, Department of Health and Social Security (Mr. Roland Moyle): My colleagues and I in the Department acknowledge that the people of Kent are at a disadvantage in the provision of health service facilities compared with other parts of the region. Hitherto we have examined some of the broader implications, but we have tended not to examine the alleged deficiencies in detail. The debate allows us some opportunity to remedy the situation in at least part of Kent.
I concentrate first on the specific aspects of the health services in Kent that were referred to by the hon. Members for Ashford (Mr. Speed) and Folkestone and Hythe (Mr. Costain). I shall then move on to consider some of the wider issues of general health service provision within Kent and the South-East Thames Region of the National Health Service.
I note that the hon. Member for Ashford has absorbed a large part of what I said on 3rd March. There is not a great deal of hard advance on that.
We regard the William Harvey Hospital as a major step towards correcting the deficiencies in the NHS in South-East Kent. The project has taken longer than we would wish. Planning for the new district hospital started about 10 years ago, and successive Ministers have continued to regard it as a worthwhile development. When it is opened it will provide over 300 acute beds and a full


range of supporting services. I believe that it will bring a noticeable benefit to the people of South-East Kent. I cannot, unfortunately, comment on the extra number of beds that will be provided, but I shall write to the hon. Gentleman.
The hon. Gentleman asked about the opening date. I regret that there has been some further delay in opening the hospital. Full in-patient service is not now scheduled to be available until February or March next year. Outpatients are likely to be admitted about a month earlier. This has resulted from a delay of four months, from April to July of this year, in the handover from the contractors. The commissioning of a new hospital is a complex and somewhat lengthy business. Commissioning will not be able to begin until July, with hand-over taking place in February or March of next year.
The population of East Kent is fairly widespread and, therefore, no single location for the hospital could be expected to please everybody. However, Ashford has a great deal in its favour. I understand that the hon. Gentleman visited the construction site in January 1976 and at that stage said that he was favourably impressed with the range of modern facilities that could be provided. I believe that when the hospital comes into operation next year many of South-East Kent's health problems will start to be seen in a different light.
The hon. Gentleman asked some specific questions about services at the hospital. The Kent Area Health Authority would want to see further development on the William Harvey Hospital site. In other words, it would like phase 2 and it intends to build it. However, once phase 1 is completed phase 2 will have to contend for priority with much needed developments in other districts such as the Medway district. At this stage I do not know how the order of priorities will eventually sort themselves out.
It is also the authority's intention to operate a 24-hour casualty service at the William Harvey, but the way of achieving that continues to be a matter for discussion. It is essentially a matter of medical organisation. There are some who consider that, for the time being, the best course on medical grounds would be to concentrate the accident and emergency

service on existing facilities at the Kent and Canterbury hospital.

Mr. Costain: Rubbish.

Mr. Moyle: That is the view of some of the southern medical people there. These matters will have to be argued out.
A small physiotherapy department is being set up for in-patients, but as the hon. Gentleman supposed, for the foreseeable future outpatients will have to receive this service at Ashford Hospital.
There will be seven operating theatres, as planned, but it is thought probable that no more than six theatre teams will be required to meet surgical needs in the first phase.
Both hon Gentlemen referred to the question of waiting lists. Unfortunately, this problem has been with the National Health Service for many years. Some of the waiting lists reflect limited resources, but do not always reflect limited financial input. This is particularly true of orthopaedic surgery where recent developments in surgical techniques make new treatments possible and they have created a greatly increased demand. This is combined with the blocking of orthopaedic beds by an increasing number of frail, elderly females who break the necks of their femurs and things of that sort. This rapid increase in demand, plus the bed blocking, must be related to the many years that it takes to produce the appropriate consultants, who are coming along, but there is still a substantial gap.
A further contribution towards improving the waiting list position in South-East Kent should result from the extension and improvement of the orthopaedic ward at the Buckland Hospital, Dover. This programme is due to start in the current year, and its effect should be felt in about two years. Other developments include geriatric wards at the Queen Victoria Hospital, Deal, and a geriatric day hospital at the Royal Victoria hospital, Folkestone.
Inadequate management may also be a cause of lengthy waiting lists. We are therefore actively engaged in an exercise to improve the management arrangements for hospital waiting lists with a view to a reduction of waiting times. A circular has gone out to all health authorities publicising the techniques of good management with regard to waiting lists—for example, the advantages of holding


waiting lists for hospital in-patient admissions which are common to a number of consultants within one specialty, increased use of day surgery and five-day wards, and the provision of regular information about waiting lists to consultants, management teams and general practitioners so that patients may be given the opportunity of accepting earlier treatment at a hospital farther from their homes.
The hon. Member for Folkestone and Hythe raised some cross questions about Folkestone hospital. I am well aware that the fate of the acute services provided there has been a matter of concern locally since early 1976 when the district management team initiated discussions on the rationalisation which might result from the opening of William Harvey.
The provision of an accident and emergency service for a seaside town was raised by the hon. Gentleman. It is a common problem in seaside towns. I regret that there is no ideal solution. The answers that we have so far been able to give are the result of a thorough study by the health authorities. I wrote to the hon. Gentleman on 22nd September last, saying:
I have been assured that the Area Health Authority and the District Management Team are very anxious to ensure that the best possible service is provided within the resources available to them and that the need to retain a minor injuries service at Folkestone will continue to receive their close attention. They are very conscious of the genuine concern of local people and as soon as a firm and realistic decision can be reached, details of this will be generally publicised.
I take issue with the hon. Member for Ashford on the title that he gave to this debate—deterioration of the NHS in South-East Kent. I appreciate that he does not want to make party points. On the other hand, I would like to defend the National Health Service. The district's throughput of patients, as measured by deaths and discharges per available bed, has increased steadily in both the medical and surgical specialties from an overall average of 18¼ patients per bed per year in 1974 to 19½ patients per bed per year in 1977. I feel that in time, as the planning system improves, genuine deficiencies in service will be remedied.
I turn now to the Resource Allocation Working Party formula as it affects Kent and the South-East Thames Region. Redistribution carried on under this has resulted in the South-East Thames

Regional Health Authority obtaining only one-third per cent. growth per year.
The hon. Member for Ashford put in what he regarded as an early post-Budget bid. Perhaps I can give him an early post-Budget reassessment of the South-East Thames Region's position. It is very tentative. It is likely that the region's rate of growth will double as a result of the statement of my right hon. Friend the Chancellor of the Exchequer this afternoon, and this will probably mean about £1 million extra for the region. Some of this, of course, will be hypothecated to various purposes such as kidney machines, and other various priorities which my right hon. Friend mentioned, and it will not all be available for revenue funding for the region or the area.
Let me give some statistics. In 1977–78 the allocation was £78 per head being spent in the Kent catchment population compared with £108 in Greenwich and Bexley, and £122 in Lambeth. Southwark and Lewisham.
I should deal here with the problem raised by the hon. Member for Folkestone and Hythe with regard to the Kent Area Health Authority. I am happy to say that the authority has announced an allocation of funds to provide a 24-hour ambulance service at the Lydd ambulance station, which serves Romney. Discussions with staff on arrangements for the services are now in hand.
On the allocation of resources in London, the indications derived from the RAWP formula are largely hospital based. The GP service in Kent is of very good quality.
Another message I should like the hon. Gentleman to convey is that people in South London tend to say that they have spent a great deal of money on their social services in recent years and that they are not sure that the people of Kent have done the same. They sometimes think that weakness in the Kent social services has been used as an argument for taking health service resources from South London. They say they have played the game properly for many years. I am not saying that this is true, but it is a message that perhaps the hon. Gentleman would like to convey.
On national policy, my right hon. Friend the Secretary of State has said:


I am determined that the resources of this national service should be more fairly shared. Redistribution must not only be between regions but within regions as some of the biggest inequalities are between rich and poor areas or districts. But in seeking a fairer distribution I am equally determined not to destroy the quality of excellence in the National Health Service, the opportunities for new discovery or the tradition of medical education of which we are rightly proud.
This is a big problem in that most of the riches of the London region are locked up in three major teaching hospitals. The people of Kent will want the resources of those hospitals in the future to man their health services. When allocations were made for 1977–78, the RHAs were told that resource targets should be assessed for areas. It was discovered that it would be very difficult to

make the allocation for that year stick when there was no growth and there was therefore a standstill last year. At its last meeting, however, the regional health authority considered the allocation for 1978–79, and it felt able to recommend a modest first stage of improvement in Kent's relative position, both in terms of capital and revenue funding. I hope that this will be the beginning of an exercise that will continue steadily in the future.

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at six minutes to Twelve o'clock.